ECON 2304 Lecture 2: Lecture 2

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8 Feb 2017
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Chapter 2
Ivan Rivera
Wednesday, February 1, 2017
4:35 PM
Market
o Two individuals (seller and a buyer) is considered a market
o Summation of individual demand curves
Change in demand
o When the demand curve shifts right or left
o Cause by a change in the determinants of demand
Determinants of demand
Income
Taste and preferences
Number of buyers
Expectations
Substitutes and compliments
change in quantity demanded
o Cause by a change in the price
Supply curve
o The law of supply
A principle in economics that states that as the price of a good, service, or
resource rises, the quantity supplied will increase, and vice verse, all else held
constant
o Change in supply
o An increase in the quantity of a good, service, or resource supplied at every price
Shifting the supply curve left or right
Caused by the determinants of supply
o Change in quantity supply
Caused by change in price
A price change within the market you are talking about creates a move
along the curve and not a move of the curve
o Increase in supply vs. increase in quantity supplies
Increases in supply come from non price changes that increase the quantity
supplied at every price
Increase in quantity supplied come from a raising of the price
Six non price determinants of supply
o Taxes
o Subsidies
o Resource costs
o Use of technology
o Number of sellers
o Expectations of future prices
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