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Lecture

ECON 2010 Chapter 3 Notes

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Department
Economics
Course
ECON 2010
Professor
All Professors
Semester
Winter

Description
1172014Chapter 3Supply and DemandThree QuestionsWhatTo produceHowWith what materials in what methodFor whomTarget marketCentral Planning and the MarketGovernmentdecides prices and distributionthe Marketdistribution depends on the interaction buyers and sellersBuyers and sellers have different motivationsbuyers want to benefit from the goodsellers want to make a profitMarket Price balances two forcesvalue buyers derive from the goodcost to produceDemanddemand curveillustrates the quantity buyers would purchase at each possible pricedemand curves have a negative slopeconsumers buy less at higher pricesconsumers buy more at lower pricesBuyers value goods differentlyThe buyers reservation price is the highest price an individual is willing to pay for a goodexample if you buy a painting at 100 what about your reservation price100Demand reflects the entire market not one consumer
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