Chapter2 - Chapter 2 Supply and Demand Overview: In this...

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Chapter 2 Supply and Demand Overview: In this chapter, we will cover the following topics. 1. Demand and Supply Analysis. Determinants of Demand and Supply. Equilibrium Quantity and Price. Adjustment to Equilibrium. 2. Taxes.
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1. Demand and Supply Analysis. Demand and Supply Analysis: is a basic tool for analyzing market outcomes, i.e. price and quantity. Required Conditions: Need a “well defined” market. Simple Definition: A market consists of the buyers and sellers of a good or service. Perfect Information.
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1. Demand and Supply Analysis. Demand Curve. Describe the relationship between price and quantity demanded (from the buyer’s perspective). (Most of the time is) downward sloping. Law of Demand: The quantity demanded rises as the price of the product falls. What types of products that exhibit upward sloping demand curves? Giffen Good (Inferior Goods that have no close substitute) Luxury (Veblen) Good (perception of high status products)
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1. Demand and Supply Analysis. Determinants of Demand
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This note was uploaded on 01/27/2012 for the course ECON 204 taught by Professor Beryl li during the Spring '11 term at University of Victoria.

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Chapter2 - Chapter 2 Supply and Demand Overview: In this...

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