ECON 2002.01 Chapter Notes - Chapter 3: Ceteris Paribus, Price System, Demand Curve

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ECON 2002.01 Full Course Notes
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ECON 2002.01 Full Course Notes
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Document Summary

Definition: markets are institutions that enable buyers and sellers to interact and transact business. Markets differ in geographical location, products offered, and size. Prices contain a wealth of information for both buyers and sellers: price system. A name given to the market economy because prices provide considerable information to both buyers and sellers: demand. An individual s valuation of a good or service, equal to the most an individual is willing and able to pay. The maximum amount of a product that buyers are willing and able to purchase over some time period at various prices, holding all other relevant factors constant (ceteris paribus). Holding all other factors constant, as prices increases, quantity demanded falls, and as price decreases, quantity demanded rises. A graphical illustration of the law of demand, which shows the relationship between the price of a good and the quantity demanded. A table that shows the quantity of a good a consumer purchases at each price.

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