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Unformatted text preview: Why does Government intervene?: Legal framework Protect consumers Protect labor Protect environment Chapter 3 Definitions of: Utility Factor market Product market Demand Supply Demand schedule Demand curve Supply schedule Supply curve Ceteris Paribus Market demand Market supply Market participants and their goals: Consumers maximize utility Business firms maximize profits Government-- maximize social welfare Foreigners-- maximize utility and/or profit Chapter 3 continued Law of demand Law of supply 5 determinants of demand 6 determinants of supply Change in demand vs. change in quantity demanded Change in supply vs. change in quantity supplied Equilibrium vs. surplus vs. shortage Price ceilings Price floors...
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