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Economics 2010o (aced the test and got 96%)

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ECON 2010
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Economics 2010 Chapter 3 Supply and DemandABuyers Side of the Market DemandaMarketexchange of goods and services for moneybNot demand but buying not supply but sellingiApproach all suppose questions by imagining yourself in the role of the party whos behavior changescTermsiDemandability AND willingness to purchase a good or service at VARIOUS prices1One cannot DEMAND something without both ability AND willingness2Price is NOT a determinant because it is at VARIOUS pricesiiQuantity DemandedSPECIFIC amount of a good or service that someone is willing and able to buy at a SPECIFIC price1Price of good IS a determinantinverse relationship between price and QDiiiSUPPOSE price of a good or service increases everything else held constant1Quantity Demanded will decrease 2Demand will not changeivReservation Pricemaximum price a buyer is willing and able to pay for a good or service minimum price a seller is willing to sell a good or service fordDeterminants of Demand anything that influences ability or willingness to buyiIncomeinhibits abilityiiPrice of Related Goodsinhibits willingnessiiiTastes and Preferencesinhibits willingnessivExpectationsTHE determinant of demandvNumber of Potential Buyers eFurther breakdown of determinantsiIncome Matters1Depends on good or serviceaIncome increases demand for NORMAL good increasesbIncome increases demand for INFERIOR good decreasesiiPrice of Related Goods Matters1Substitutes buy this OR thataIf price of A increases demand for B will increasebPRICES of substitutes move together iIf a good becomes more desirable after substitutes price increase demand for other increases the price for that good will increasecAsian markets occur before European and American market thus Asian market sets trends and all other markets substitutes follow suit2Complement buy this WITH thataIf price of A increases demand for B will decrease bagels and cream cheeseiiiExpectationswhat you think will happen1If you expect the price of a good to increase in the future demand for that good TODAY will increaseaPrefer to buy when price is low2If you expect income to decrease in future laid off then you will be less likely to buy a housecar todayBSellers Side of the Market SupplyaTermsiSupply1Parallels demand curve2Ability and willingness to sell a good at various pricesiiQuantity Supplied1Specific amount of a good or service people are willing and able to sell at a specific price
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