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JMU - ECON 200 - Class Notes - Week 3

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JMU - ECON 200 - Class Notes - Week 3

School: James Madison University
Department: Economics
Course: Macroeconomics
Professor: Amanda Deerfield
Term: Spring 2016
Tags: Macroeconomics
Name: ECON 200
Description: These notes cover what was discussed during the third week of classes.
Uploaded: 09/19/2016
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background image ECON WEEK 3 Notes: 
 
Demand­ What makes someone buy something? 
 
Demand represents the behavior of the buyers. A demand curve shows the quantity demanded 
at different prices. Price and Quantity are negatively related. The higher the price the less the 
quantity, the lower the price the higher the quantity.  
 
When this is applied to a chart, there are two ways to read it. Horizontally­ How much of a 
product buyers are willing to purchase the product at a certain price. Vertically­ Highest price 
buyers are willing to spend.  
 
Supply­ How much of something is available for purchase? 
 
A Supply Curve shows the quantity supplied at different prices. A Shortage is caused when 
prices are too low. A Surplus is caused when  prices are too high.  
 
The Supply curve curves up because the cost of producing a good is not equal across all 
suppliers. Like the Demand chart, there are two ways to read the spply chart. Vertically­ How 
high can I sell this product for and still make profit without surplus? Horizontally­ How much are 
buyers willing to consume at a price? 
 
Producer surplus is when the producer has more product than they have outlets to sell it from, 
either because of limited number or an unstable price line. The price line is the logical limit of 
maximum price a producer can sell for without running into a surplus or shortage. Surpluses and 
shortages are both bad for producers when they occur without planning. Producers gain from 
exchange. The difference between market price and the lower (minimum) price line is the profit 
margin.  
 
Changes in supply cause an intense change in the market. When the price line of the production 
for the new supply is lower, it is cheaper to produce. Therefore, it would benefit the market to 
increase supply and/or lower price. If the Price line of production is higher for the new supply, 
then it is more expensive to produce. Therefore, the market would benefit, from decreasing the 
supply and/or increasing the price.  

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School: James Madison University
Department: Economics
Course: Macroeconomics
Professor: Amanda Deerfield
Term: Spring 2016
Tags: Macroeconomics
Name: ECON 200
Description: These notes cover what was discussed during the third week of classes.
Uploaded: 09/19/2016
1 Pages 9 Views 7 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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