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Class2_3_slides

# Class2_3_slides - Econ 100 Class 2&3 Demand and Supply...

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Econ 100 1 Winter 2012: Professor Bushnell Econ 100 Class 2&3: Demand and Supply James Bushnell

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Econ 100 2 Winter 2012: Professor Bushnell Outline (next 2+ classes) Demand functions Supply functions • Elasticities • Equilibrium Shocking the Equilibrium
Econ 100 3 Winter 2012: Professor Bushnell Demand: the demand curve Quantity demanded - the amount of a good that consumers are willing to buy at a given price, holding constant the other factors that influence purchases. Demand curve - the quantity demanded at each possible price, holding constant the other factors that influence purchases

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Econ 100 4 Winter 2012: Professor Bushnell A Demand Curve for Pork p , \$ per kg Demand curve for pork, D 1 Q, Million kg of pork per year 0 14.30
Econ 100 5 Winter 2012: Professor Bushnell A Demand Curve for Pork p , \$ per kg 200 220 Demand cu r v e f or po 286 Q , Million kg of po r k per y ear 0 3.30 4.30 14.30 Q = 286 20p increases by \$1 (to \$4.30) Q = 200 In general, Δ Q = -20 Δ p = slope Δ p If p = \$3.30 then, Q = 220

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Econ 100 6 Winter 2012: Professor Bushnell Factors that Influence Demand Standard demand curve gives demand as a function of the price of the product of interest What else might effect demand? – Price of substitutes (e.g. tofu) – Price of compliments (e.g. BBQ sauce) – Income of customers
Econ 100 7 Winter 2012: Professor Bushnell The Demand Function The processed pork demand function is: Q = D(p, p b , p c , Y) – where Q is the quantity of pork demanded p is the price of pork (dollars per kg) p b

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Class2_3_slides - Econ 100 Class 2&3 Demand and Supply...

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