MGEA02H3 Lecture Notes - Llama, Barenaked Ladies, Exotic Pet

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Week 2: Demand and Supply in a
Competitive Market
What did we learn last week?
-definition of economics
-opportunity cost
-production possibilities model
-calculating opportunity cost on PPF
-PPF with increasing costs
-maximizing a value (or utility) function
along PPF
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Agenda for this week:
-Overview (build-up) of the competitive
market model
-What is a market?
-What is competition?
-Demand
-Supply
-Equilibrium
-Shifts in Demand and Supply: how they
affect equilibrium
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What is a market?
A set of institutional arrangements that
bring buyers and sellers together to
negotiate the terms for exchanging goods
or services
Good = tangible
Service = intangible