Econ Notes week 2

Econ Notes week 2 - Econ Notes However tastes are defined,...

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However tastes are defined, they do not change during the course of the investigation. Given these assumptions we can assert refutable hypotheses about how individuals respond to changes in the constraints they face. Demand curve shows the amount of a good consumers wish to purchase at specific prices. Demand increases as prices fall. Demand decreases as prices rise. The supply curve shows the amount good producers are willing and able to sell at specific prices. As supply decreases prices fall. Supply increases prices raise. Equilibrium- where supply and demand meet. In a free market price and quantity are determined by the intersection of the supply curve and the demand curve. Surplus is an excess of quantity supplied over quantity demanded Shortage is an excess of quantity demanded over quantity supplied. Economic cost of any action is zero if there are no alternatives. Discrimination is anything that sets apart consumers. Consumer Theory: 1. Individual preferences and behavioral postulates. 2. Valuation 3. The optimal purchase rule and demand theory. 4. The diamond-water paradox. 5. Sale prices Economists are concerned with the consequences of the combined actions of individuals because we can’t accurately describe the preferences of a group. Behavioral Postulates:
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Econ Notes week 2 - Econ Notes However tastes are defined,...

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