ECO 9-10-07 - ECON 9/10/07 1. More on the Law of Demand! a....

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ECON 9/10/07 1. More on the Law of Demand!!! a. Shifting Demand Curves i. Change in demand (as a whole) 1. may occur from: a. price of substitutes b. price of complements c. Change in income b. Movement along the demand curve c. Total Value vs. Marginal Value d. Diminishing Marginal Utility and the Utility Maximization Rule for decisions over two goods e. EXMP: Tradewell vs. Safeway i. Claim is that the net amount spent will be less at Tradewell 1. Clever Exploitation of the law of demand a. 3 Goods Meat Fruit Canned Goods T $10 $8 $10 S $8 $10 $8 b. Demand curve : Q d = 11- P Quantity demanded= 11- P c. How much would you buy at Tradewell: Meat Fruit Canned Goods Q 1 3 1 TE $10 $24 $10 Total Spent: $44 d. How much would you spend at Safeway buying the same set of goods? 1*8+3*10+1*8= $46 e. Tradewell seems to offer a better deal f. What if it was the other way around? g. How much would you buy at Safeway: Meat Fruit Canned Goods Q 3 1 3 TE $24 $10 $24 Total Spent: $58 h. How much would you spend at Tradewell on the same items?
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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 9-10-07 - ECON 9/10/07 1. More on the Law of Demand! a....

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