Intro to Econ Week 4
Intro to Econ Week 4 Econ 201
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This 2 page Class Notes was uploaded by Katie Truppo on Saturday August 20, 2016. The Class Notes belongs to Econ 201 at University of Tennessee - Knoxville taught by Kenneth Baker in Fall 2015. Since its upload, it has received 8 views.
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Date Created: 08/20/16
Markets II: We Love Free Markets Demand and Supply make up two sides of a market Market: a collection of buyers and sellers on opposite sides who through constant negotiations and interactions determine the price of goods/services I. Markets: Examples Output Markets (Goods/Services) Goods Markets: Milk, Hamburgers, Airplanes, etc. Service Markets: Car repair, Haircuts, House cleaners, etc. Input Markets (Factors of Production) Labor Markets: Teachers, Police, Lawyers Commodities Markets: Wheat, Gold, Oil Financial Markets (Credit Markets) Markets for borrowing/lending (determines interest rates) Foreign Exchange Markets Currency Markets: Dollars -> Euros Illegal Market Market Deﬁnition: who is included and excluded Depends how you set up/describe market (broad vs. specialized) Market Out of Equilibrium Opposite sides of market will force back to equilibrium Markets, through our price system, “direct” our economic activity Changes in Equilibrium Three steps to ﬁnding the new equilibrium 1. Does the event aﬀect supply or demand? Both? 2. Which direction is the shift? Increase or decrease? 3. Where is the new Has price risen or fallen? Has quantity risen or fallen? Price Controls Price Floors: legal minimum price for goods/services Binding: Floor is above equilibrium (surplus) Price Ceilings: legal maximum price for goods/services Binding: Ceiling is below equilibrium (shortage)
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