ECON 212 Lecture Notes - Lecture 1: Pigovian Tax, Exogeny, Pareto Efficiency

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2 Oct 2017
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ECON 212 Full Course Notes
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Principles of economics (alfred marshall) supply and demand diagram for good/service. When the demand price (rd) greater than the supply price (rs): production is profitable and will increase, which will move r to the right (and vice versa) Vertical axis measure price of a good/service and the horizontal axis measures the quantity supplied. Price affects how much people want to buy and how much firms want to supply (price change does not shift the curves nor does a curve"s movement cause the other curve to shift) Inelastic curves supply or demand curve is a vertical line. Quantity does not vary with the price and the derivative of quantity with respect to price would be 0 (cid:1831)(cid:1853)(cid:1871)(cid:1872)(cid:1861)(cid:1855)(cid:1861)(cid:1872)(cid:1877)=(cid:3044)(cid:3043) (cid:3043)(cid:3044) - where the % change in quantity is compared to the % change in price. Own-price elasticity of demand is % increase in quantity demanded expected with a 1% increase in the price of the good/service.

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