ECO 9-5-07 - Econ 9/5/07 1. Law of demand a. Fallacies of...

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Econ 9/5/07 1. Law of demand a. Fallacies of demand curve i. Stock prices 1. Curve seems positive because as price seems to be going up, some people may buy more 2. Curve is not positive sloped because current prices are lower compared to your expectations of the future ii. Snob value 1. As price goes up, demand goes up because higher price reflects “snob value” 2. With a substantial change in price, the topic changes to different goods iii. Keep in mind “pecuniary” and “non-pecuniary” prices 1. pecuniary deals with money 2. Both prices are reflected into the law of demand a. Ex. Day Care Centers i. Recommendation was a fee for picking up your kids late ii. Fee lowered price by eliminating the “guilt factor” 2. Law of diminishing marginal value a. Each succeeding item has less marginal value than the one before it b. Difference between Marginal Value and Total Value i. Total value= the maximum amount one is willing to pay for a given quantity rather than have none at all. 1.
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This note was uploaded on 04/07/2008 for the course ECO 2302 taught by Professor Smith during the Spring '08 term at University of Texas at Dallas, Richardson.

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ECO 9-5-07 - Econ 9/5/07 1. Law of demand a. Fallacies of...

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