Econ Week One Notes
Econ Week One Notes Econ 232
Popular in Principles of Microeconomics
Popular in Economcs
This 5 page Class Notes was uploaded by Bruce D Corrie on Friday January 22, 2016. The Class Notes belongs to Econ 232 at Western Illinois University taught by Dr. Jessica Lin in Spring 2016. Since its upload, it has received 24 views. For similar materials see Principles of Microeconomics in Economcs at Western Illinois University.
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Date Created: 01/22/16
Principles of Microeconomics Week 1 Demand Market: A place of exchange between buyers and sellers. This is a broad term. Often a misused term when people refer to the stock exchange or economy (Ex: The market was down today) Price (P): How much money it takes to purchase a unit of output Quantity (Q): Physical amount of units Market Model Function: What is Demand? The entire relationship between price and quantity demanded Quantity Demanded (Qd): Amount customers are willing, and able, to buy Demand and Quantity Demanded are NOT the same. Pay attention to the subtle wording difference. Demand Schedule: A table that shows demand as it relates to various prices to their respective quantity Price Individual Qd Market Qd (100 customers) $0 10 units 1000 units $0.50 8 units 800 units $1.00 6 units 600 units $1.50 4 units 400 units Reservati $2.00 2 units 200 units on Price: $2.50 0 units 0 units When The ENTIRE table is Demand Qd=0 Principles of Microeconomics Week 1 Even though it is not a curving line, it is still referred to as a Law of Demand: There is a negative link between price (P) and quantity (Q) This is because of people weighing marginal benefit. People are less willing to pay the same price for extra units. The Demand Equation Straight line demand P = (Reservation Pr) + Slope of Demand Curv*Q) Principles of Microeconomics Week 1 Supply Supply: The entire relationship between Price (P) and Quantity Supplied (Qs) Quantity Supplied (Qs): Amount producers are willing and able to sell Supply Schedule: Price Individual Qs Market Qs (10 business) $0 0 units 0 units $0.50 0 units 0 units $1.00 40 units 400 units $1.50 60 units 600 units $2.00 80 units 800 units $2.50 100 units 1000 units The Supply Equation: P = (Reservation Pr) + Slope of Demand Cur*Qs) Law of Supply: It is always a positive relationship between Quantity and Supply Law of Increasing Opportunity Costs: Principles of Microeconomics Week 1 Higher levels of activity result in higher compensation prices for a sacrifice Principles of Microeconomics Week 1 Market Equilibrium Excess Demand: This is where Qd > Qs Excess Supply: This is where Qd < Qs Market Equilibrium: This is where Qd = Qs A change in Quantity Demanded means a change in every Price An Increase in Demand, shift to line to the right A Decrease in Demand, shift line to the left
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