Econ 202 Week 4
Econ 202 Week 4 ECON 202
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This 3 page Class Notes was uploaded by Andrew Notetaker on Tuesday February 16, 2016. The Class Notes belongs to ECON 202 at Western Kentucky University taught by Dr. Locke in Summer 2015. Since its upload, it has received 20 views. For similar materials see Principles of Economics: Microeconomics in Economcs at Western Kentucky University.
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Date Created: 02/16/16
Econ 202 – Professor Stephen Locke Chapter 4 - Feb 16 & 18 th Feb 16 th How do buyers and sellers interact? What is a market o A group of buyers and sellers of a particular good or service o Buyers determine demand o Sellers determine supply We will assume a perfectly competitive market o The goods offered for sale are identical o Many buyers and many sellers o No individual buyer or seller can impact the market price. They are Price Takers Quantity demanded (Q )d How much a consumer is willing and able to buy at a particular price Demand Schedule – A table that shows the relationship between the price of a good and the quantity demanded Demand Curve A graph of the relationship between the price of a good and the quantity demanded o Individual – Demand curve for a single buyer o Market – Demand curve for all buyers The law of Demand The claim that, other things equal, the quantity demanded of a good falls when the price of the good rises Diminishing marginal utility What shifts the Demand Curve Factors that shift the demand curve o Income You can buy more of what you really want with more income and less of what you were forced to with the smaller income o Price of related goods Hot dogs and hot dog buns are related. When the price of one rises the quantity demanded of the other falls o Tastes o Expectations When the expectation of a good is expected to change the price that affects the demand by influence o Number of buyers If there is a reduction of buyers the demand will decrease if there is a rise the demand will increase The only thing that changes Quantity Demanded is the price Quantity Supplied How Much a seller is willing and able to sell at a particular price o Represents a point on the supply curve Supply Schedule o A single point on the supply curve Supply Curve A graph of the relationship between the price of a good and the quantity supplied o Individual Supply curve for a single seller o Market Supply curve for all sellers Law of supply The claim that, everything else constant, the quantity supplied of a good rises when the price of the good rises. Putting Supply and Demand Together Equilibrium – A situation in which the market price has reached a level where Q = Q d s Marginal Cost determines the supply curve The buyer’s willingness to buy determines the demand curve
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