CH 2-3 - CH 2-3/4 Supply and Demand (Ch.3 + 4): -Formation...

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CH 2-3/4 Supply and Demand (Ch.3 + 4 ): -Formation of equilibrium prices and equilibrium -Certain situations where we fail to reach equilibrium -Markets: Any type of seller and buyer, whether it is stock or tomatoes, or even whether a sale takes place. -No two markets are the same. -There are markets that are super-competitive, and then there are markets on the opposite where there are monopolies. Classification of Markets (Concentrated-monopolies, high prices vs. competitive, low price) 1. The # of sellers matters a lot. 2.It also matters whether you have product differentiation on the market, this might give more power to producers over others 3. Entry barriers: The amount of initial investment you have to make to enter the market (Usually pretty high). It is very likely if you have high barriers, the number of producers is low. Behavior of Consumers and Producers : Exclusively looking at supply-side factors- P QD (Quantity Demanded per week) 0.25 6 0.50 5 1.00 3 -Inverse Relationship: when price goes up, QD goes up 2.00 1 Demand 1. This is The law of demand : Other things being equal, ceterus paribus, when the price goes up the quantity demanded goes down. Price is the independent variable, yet price and cost is always on the Y axis. Price (Y) -Change in price: You say you have a change in “Quantity demanded” - Concave, curving to the left
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Quantity Demanded If the effect of any of these independent variables (I.e. income) changes in a positive way, the line will move to the left. It is a change in “Demand” to the right. -The opposite (To the left) if the effect is negative.
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This note was uploaded on 04/06/2012 for the course ECON UA 1 taught by Professor Harrykitsikopolous during the Fall '11 term at NYU.

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CH 2-3 - CH 2-3/4 Supply and Demand (Ch.3 + 4): -Formation...

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