lecture3 - Think Like An Economist Objectives Today's...

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Think Like An Economist
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Objectives Today’s Lecture: Competitive Markets Demand Supply Market Equilibrium
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Markets and Prices Markets are where buyers and sellers meet to exchange goods and services - Exchange information and do business. Can be informal or formal
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Demand Demand is something, that you: Want, can afford, made a plan to purchase satisfy. Quantity demanded of a good or service: Amount that consumers plan to buy during a particular time period, and at a particular price. Reasonable desire to purchase (can afford!)
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Demand… Demand Schedule Price Qty E 2.50 2 D 2.00 2.5 C 1.50 4 B 1.00 6 A 0.50 8.5 Q P ????
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Demand… Demand Schedule Price Qty E 2.50 2 D 2.00 2.5 C 1.50 4 B 1.00 6 A 0.50 8.5
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Law of Demand Other things remaining the same , the higher the price of a good, the smaller is the quantity demanded . (Latin: Ceteris Paribus – other things equal) Quantity (Q D ) D Price (P)
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Demand… Demand curve: willingness-and- ability-to-pay curve. Smaller the quantity available, higher price someone is willing to pay for another unit.
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Determinants of Buyer’s Decisions 1. The price of the good; 2. The prices of other goods; 3. Expected future prices; 4. Income; 5. Population; 6. Preferences.
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- Price of substitutes;
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This note was uploaded on 04/10/2008 for the course ECON 001 taught by Professor Herman during the Spring '08 term at Georgetown.

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lecture3 - Think Like An Economist Objectives Today's...

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