ECON 1 Lecture Notes - Lecture 5: Marginal Cost, Demand Curve, Marginal Utility

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Markets- can be global, national or local and bring together buyers and sellers. All markets involve demand, supply, price and quantity. Price is reached through the interaction of buyers and sellers. Demand is a schedule or a curve that shows the various amounts of a product that consumers are willing and able to purchase at each of a series of possible prices during a specified period of time. Law of demand- other thing equal as price falls, the quantity demanded rises and as price raises the quantity demanded falls. An inverse relationship between price and quantity demanded or the law of demand. In any specific time period, each buyer of a product will derive less utility from each successive unit of the product consumed. Consumption is subject to diminishing marginal utility. Therefore, since the more units purchased yield less marginal utility consumers will buy additional units only if the price of the units is progressively reduced.

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