eco lec

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7 Oct 2011
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26/09/2011
Demand’ Supply and Market Price
Competitive Market
Many buyers and sellers’ each of who has no influence on market price
Ex: Coffee
Law of Downward Sloping Demand
Other things equal, the higher is price of a good, the lower is the quantity
demanded.
Price Quantity Demanded
5 0
4 3 Candy Bars
3 6
2 9
Market Demand Curve: Sum of individual demand curves (at each possible price,
sun the quantities demanded by each individual)
A change in quantity demanded (as the price of the good changes) is a
movement along the demand curve.
A change in demand (for a given price) is a shift in the demand curve Sources
of shifts in demand curves
a. Price of related goods
i. Substitutes
ii. Complements
b. Income
c. Preferences
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