Chapter 3 - Chapter 3 Demand, Supply, and Market...

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Chapter 3 Demand, Supply, and Market Equilibrium Market - An institution or mechanism, that brings together buyers and seller of particular goods, services, or resources. -Markets need not be physical, they include any link between potential buyers an sellers and can be local, national, or international. -Markets are assumed to have standardized products, with many buyers and many sellers, each acting independently. Demand - Is a schedule or curve that shows the various amounts of a product (or resource) that consumers (or demanders) are willing and able to purchase at each price in a set of possible prices during a specified period of time, all else equal. Law of Demand - All else equal, as the price of a product falls, the quantity demanded rises, and as the price rises, the quantity demanded falls. 1. Ability- A higher price leaves some potential buyers unable to purchase the product. 2. Diminishing marginal utility- In a specific time period, a buyer will derive less satisfaction from each successive unit of the product consumed; therefore, the buyer is willing to buy more of the product only if the price is reduced. 3.
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This note was uploaded on 04/09/2008 for the course ECON 101 taught by Professor Rissell during the Spring '08 term at Villanova.

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Chapter 3 - Chapter 3 Demand, Supply, and Market...

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