ECON 20 Lecture Notes - Lecture 10: Marginalism, Marginal Utility, Marginal Cost

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Must understand the types of rivalry, which that influences final outcome of market depending on what kind of rivalry: consumer producer rivalry- occurs because of competing interests of consumers and producers. Consumers try to negotiate or find lower prices, producers try to negotiate higher prices. They are trying to rip each other off. There are limits to this because if consumer wants price too low, producer won"t sell. If producer price want too high of a price, consumer won"t buy. Provides natural check and balance even in monopolies. Example is car buyer and sales person: consumer-consumer rivalry- reduces negotiation power of consumers in market. Arises because of scarcity, when limited quantities of goods are available, consumers compete to buy it. Consumer with highest price wins the scarce good. Example: auction: producer-producer rivalry- occurs only when multiple sellers of a product compete in market.

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