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Economics Lecture 2- Chapter 3 and 4.docx

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McMaster University
Bridget O' Shaughnessy

Lecture 2- Chapter 3 and 4 15/01/2013 5:32:00 PM WHATEVER FINDING THE OPPORTUNITY OF IS THE DENOMINATOR Example 1 There are 2 interior decorators who can paint and wallpaper, They have 30 hr work weeks. Martha can paint 20 rooms or wallpaper 5 rooms, Steward can paint 10 rooms of wallpaper 8 rooms. See rest of chapter 3 NOTES (graphs) Chapter 4 Example: pepsi example  Cheaper, the more people buy  Some cases when it was 0 dollars, less people would buy it than if it was 25 cents When price goes up we buy less Markets Market= group of buyers and sellers There are 4 types of market structure 1. Perfect competition 2. Monopoly a. One seller b. Fewer monopolies now than there were in the past i. Before only bell had phone service, now there are a lot ii. DeBeers diamonds has most of market for diamonds (they charge by demand, or sometimes government regulation) 3. Oligopoly a. Small number of firms that act like a monopoly to maximise profit, doesn’t usually last long, they usually cheat 4. Monopolistic competition Demand  Quantity Demanded (Q^d): the amount of a goof that buyers are willing and able to purchase  The variables that influence how much buyers want to buy are: o Price o Income  Normal and inferior goods o Price of other goods  Substitutes and complements  Hot dogs and hot dug buns  The pill and condoms o Taste  When doctors said that wine was good for your heart, wine industry was very happy  Change in taste, people stated to have more wine  There is more snow this winter, demand for snow shovel and snow blower goes up  Price of snow blower ins’t increasing o Expectations  Wednesday before the may long weekend, if I wait till Friday, the price would be higher Demand  Law of Demand: other things equal (ceteris paribus), the quantity demand
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