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ECON385 January 21st

by: Sarah Smith

ECON385 January 21st ECON385

Marketplace > George Mason University > Economcs > ECON385 > ECON385 January 21st
Sarah Smith

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Notes of the first week
Econ 385
Professor Colin Doran
Class Notes
Economics, global affairs
25 ?




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This 5 page Class Notes was uploaded by Sarah Smith on Friday March 4, 2016. The Class Notes belongs to ECON385 at George Mason University taught by Professor Colin Doran in Spring 2016. Since its upload, it has received 57 views. For similar materials see Econ 385 in Economcs at George Mason University.


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Date Created: 03/04/16
1. Why study global economic issues and policies?  2. How important are global markets for goods and services?  3. How important are the international monetary and financial markets?  4. What are market supply and demand?  5. What are consumer surplus and producer surplus?  6. How are market prices determined? Intro to Global Economy­ Globalization Economic Integration: extent and strength of real and financial sector links among national  economies  Global market for goods and services – real markets  ­1. Since the 1980’s, volume of global trade has grown an average annual rate of  5%  ­2. Cumulative effect is more than a 5 fold expansion of global trade  15 10 5 0 Annual Percentage Change -5 -10 -15 Year ­3. As a share of output, global markets have become more important  Malaysia Thailand Switzerland Chile Canada 2011 1980 France India Australia United States Japan 0 20 40 60 80 100 120 140 160 180 [VS.]  (Financial) International Monetary and Financial Markets – financial sector ­exchange markets ­FDI (Foreign Direct Investment), taking about 12% in investing in a foreign  country ­Markets have experiences substantial growth more volume than goods and services ­Foreign Exchange transactions have grown to more than 60x world exports  Demand is relation between individual willingness to pay and the quantity of  demand  Law of Demand: (has never been violated); there is an inverse, or negative,  relationship between the price and quantity demanded Price of |Quantity (gallons) 2.95|1  2.90|2 2.85|3 Movement along the demand curve Change in price or change in quantity demanded movement along then demand  curve Change in non­price  Change in demand (shift)  PINTE: Price of Related Goods:  ­substitute (coffee and tea goes down because they both have caffeine) ­complement (i.e. hot dog buns go with hot dogs) Buns market [inverse]: buns market is going go down if the complement  (hot dogs) is going up Income: Normal good (Income up, demand up) and Inferior Good (Income up,  Demand down) (i.e. limos vs. taxis)  Number of buyers (i.e. why housing prices are so high; because of the amount of  people who need houses ) Taste of preference: People start hating cars that pollute, therefore the market of cars that pollute  will go down Expectations (“I think toilet paper is going up, I’m going to be like Honey Boo  Boo’s mom and buy a lot now instead ”; If it’ll be cheap later, buy more later; If it’ll be expensive later, buy more now) Supply – relation between the price and the quanity supplied  Law of Supply – Direct positive relationship between the price and quantity  supplied Price of Gas        |Q of gas  2.95  |250 2.9 |200 2.85 |150 2.8 |100 2.75 |50 “Change in Supply” Shift – non­price determinants Prices of other goods that the firm is able to produce, i.e. oil to natural gas; subs and complements Number of sellers; Supply goes up, number of sellers goes up Technology; goes up, supply goes up Taxes and Subsidies (also can be in demand non­price determinants because it  depends on the elasticity of the situation); tax goes down, supply goes up; subsidies  goes up, supply goes up Expectations; if you expect price to go up in the future, you hold on to supply;  Resource prices/input prices; Weather: i.e. snowstorms that shut down shops and kill crops Supply and Demand 1,000 consumers 20 producers When you’re willing to pay $2.95 but you’re paying $2.85, you’re then getting a  $.10 surplus. This is consumer surplus. Difference between willingness to pay and what is actually paid Producer surplus: difference between willingness to sell and actual price sold Below demand, above price Above supply, below price


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