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Lecture

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Department
Economics
Course
ECO105Y1
Professor
Paul Cohen
Semester
Fall

Description
September 24, 2012 Economics Law of demand Demand is the amount consumers are willing to pay for a product/service Price and quantity demand is inverse relation Now for demand – willing AND ability to pay Why pay for something when you can get it for free (SUBSTITUTES) ex downloading songs Marginal – additional benefits from a choice, changes with circumstances Diamond – water paradox  Willingness to pay depends on marginal benefit, not total benefit  Water is everywhere and diamonds are not abundant Sweeping sidewalks with water because water isn’t metered is a good idea while if it is metered and charged and billed per use then it is better to use a broom Market demand Sum of demands of all individuals willing and able to pay of products/services Law of demand If price changes rise quantity demand decreases When price changes and rises quantity demand decreases When price changes we move along the demand curve That is Price on the y-axis and quantity sold on the x-axis Quantity demand is affected by change in price Demand –willingness &ability to pay Increase in demand – and the demand curve will go to the right While a decrease in demand and the demand curve will go to the left Price change is quantity demand anything else is demand Things that affect
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