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Canada (161,930)
Economics (479)
ECO105Y1 (83)
Paul Cohen (14)
Chapter 4

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Paul Cohen

Chapter 4: Coordinating Smart Choices (Demand and Supply) Market: The interactions of buyers and sellers -Competition happens between buyers competing to buy the same product (example of eBay). From the perspective of sellers, they compete to attract buyers . -Cooperation happens during the interaction between buyer and seller, due to the existence of voluntary trade. Property Rights: Legally enforceable guarantees of ownership to physical, financial, and intellectual property -Prices are the outcome of a market process of competing bids (from buyers) and offers (from sellers). -The best way to understand why prices settle at particular numbers is to look at what happens in markets when prices have not settled. Shortage or (Excess Demand): quantity demanded exceeds quantity supplied. -Shortages create pressure for prices to rise -Rising prices provides signals and incentives for businesses to increase quantity supplied and for consumers to decrease quantity demanded eliminating the shortage. Surplus or (excess supply): quantity supplied exceeds quantity demanded -Surplus creates pressure for prices to fall -Falling prices provide signals and incentives for businesses to decrease quantity supplied and for consumers to increase quantity de
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