Menu_31_Jan_11-2 - ii. Complements: Increase price (-)-AND...

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TODAY’S MENU: Monday 31 January 2011 I. BUSINESS A . Practice Problems 1. Chapter 4: 1, 3-7, 10-20, 22 B. First Exam: Two weeks from today (14 February) II. SUBSTANCE A. How Trade Can Benefit All: An example 1. Conclusions B. Buyers’ side of market: Demand 1. Definition 2. Not to be confused with Quantity Demanded 3. Determinant of Quantity Demanded a. Price of good (-) i. Link with Reservation Price 4. Determinants of Demand a. Income i. Normal good (+) ii. Inferior good (-) b. Price of related goods in consumption i. Substitutes: Increase price (+) - 2 goods related, relation is a an “THIS OR THAT” - relationship of the price of one and the demand for the other - if price of one increase everything else held constant the demand for the other good increases as well
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Unformatted text preview: ii. Complements: Increase price (-)-AND purchased together -price of one goes up the demand for the other decreases -prices move opposite (helps understand how business price goods) c. Tastes and preferences (+)-everything else held constant, something else becomes more desirable -demand will increase d. Expectations-what you think will have in the future change your expectations i. Future price (+) ii. Future income: normal good (+); inferior good (-) e. Number of buyers (+) 5. Graphically a. Change in Quantity Demanded: movement along curve b. Change in Demand: shift of entire curve III. NEXT TIME A. Finish Chapter 4: Supply and Demand...
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This note was uploaded on 02/14/2012 for the course ECON 2030 taught by Professor Bong during the Fall '07 term at LSU.

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Menu_31_Jan_11-2 - ii. Complements: Increase price (-)-AND...

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