Lectures 7 & 8

Lectures 7 & 8 - EC101 B1 & E1 Manove Lecture...

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EC101 B1 & E1 Manove Lecture 7: Supply and Demand Supply & Demand p 1 EC101 B1 & E1 Manove Announcements ± Midterm Exam: Thursday, Oct 2. z Review textbook and lecture notes. z Do problems, problems, problems. z You will be able to repeat all of the Aplia problem sets in You will be able to repeat all of the Aplia problem sets in the week before the exam (but they will not be graded again). ± Pay for Aplia today (if you haven’t already). z If you bought your book at the BU Bookstore you have already paid, but you must register the key included with the book with the book. Supply & Demand p 2
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EC101 B1 & E1 Manove Supply and Demand ± We have introduced the idea of a free-market model and looked at examples of voluntary exchange. ± Today, we examine the free-market model in greater detail to understand how a market greater detail to understand how a market economy works. ± In particular, we examine supply & demand, which helps explain how people decide what and how much to buy and sell . Supply & Demand p 3 EC101 B1 & E1 Manove Before we do so, an item about illegal drugs… ± According to the Office of National Drug Control According to the Office of National Drug Control Policy (ONDCP) z Marijuana spending in 1990 Marijuana spending in 1990: z Marijuana spending in 2000: ± Was National Drug Control Policy in the 1990s effective? ± Later, we will see how supply-demand analysis Supply & Demand>Drug Control Policy p 4 can help answer this question.
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EC101 B1 & E1 Manove How can economists predict prices and quantities bought and sold? ± Suppose there are, say, a hundred people who want to buy milk,… Supply & Demand>Milk p 5 EC101 B1 & E1 Manove Predicting prices 2 ± What questions should you ask? Supply & Demand>Milk>Predicting Prices p 6
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EC101 B1 & E1 Manove Interviewing Buyers ± Suppose you are interviewing a buyer named Emily. ± You should pose the following questions: z “Emily suppose you could buy milk for Emily, suppose you could buy milk for $1.20 per quart. How much milk would you want to buy? Supply & Demand>Milk>Interviewing Buyers p 7 EC101 B1 & E1 Manove Interviewing Buyers ± You should pose the same question for all reasonable prices reasonable prices. Supply & Demand>Milk>Interviewing Buyers p 8
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EC101 B1 & E1 Manove Interviewing Sellers ± Suppose you are interviewing a seller named Farmer Jones. ± You should pose the following questions: z “Farmer Jones suppose you could sell milk for Farmer Jones, suppose you could sell milk for $.20 per quart. How much milk would you want to sell? Supply & Demand>Milk>Interviewing Sellers p 9 EC101 B1 & E1 Manove Interviewing Sellers ± You should pose the same question for all reasonable prices reasonable prices. Supply & Demand>Milk>Interviewing Sellers p 10
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EC101 B1 & E1 Manove Using the Information ± The information you get from buyers is called… ± The information you get from sellers is called . ..
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This note was uploaded on 02/06/2012 for the course ECONOMICS EC101 taught by Professor Michaelmanove during the Spring '10 term at BU.

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Lectures 7 & 8 - EC101 B1 & E1 Manove Lecture...

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