ECN 100 Lecture Notes - Lecture 3: Ceteris Paribus, Demand Curve, Barter
Document Summary
The goal of this chapter is to assess how markets function. Each participant has specific goals: consumers maximize happiness or satisfaction from goods and services, businesses maximize profits, government maximized societal welfare. Markets maximize the return on limited resources: a market is any sold place where goods are bought and sold, two distinct markets are: Product markets: a market exists wherever and whenever an exchange takes place. Two sides of each market transaction are called supply/demand: supply: A demand exists only if someone is both willing/ability to pay for a good: willingness to pay is determined by one"s income/opportunity cost, demand is an expression of buyer"s intentions, not a statement of actual purchases. Demand can be illustrated using a demand schedule or demand curve. Demand shows consumers quantities demanded of a good at alternative prices: in a given time period, holding all other influences constant.
