Macroeconomics Chapter #3
Macroeconomics Chapter #3 eco 105
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This 2 page Class Notes was uploaded by Daniel Hong on Thursday October 1, 2015. The Class Notes belongs to eco 105 at Pace University taught by Mark Weinstock in Fall 2015. Since its upload, it has received 29 views. For similar materials see Principles of Economics: Macroeconomics in Economcs at Pace University.
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Date Created: 10/01/15
Chapter 3 Exchange and Markets Import a product produced in a foreign country and purchased by residents of the home country Export a product produced in the home country and then sold in another country Law of Demand 0 If price goes up then quantity goes down 0 If price goes down then quantity goes up Law of Demand people who are willing and able to purchase a good or service 0 Income plays an effect on the demand curve 0 As well as population Non Price Determinants everything else that determines whether you but something or not 0 People s preference and or taste Law of Supply if the seller can make more money by selling a product then the seller will want to sell more products Market Economy An economy in which people specialize and exchange goods and services in markets Contracts they specify terms of exchange facilitating exchange between strangers Insurance it reduces the risk that entrepreneurs face Patents that increase the profitability of inventions encouraging firms to develop new products and production process Accounting Rules provide potential investors with reliable information about the financial performance of a firm Virtues of Markets Centrally Planned Economy an economy in which a government bureaucracy decides how much of each good to produce how to produce the good and who gets the good Role of Entrepreneurs They play a key role in a market economy Prices and profits provide signals to entrepreneurs about what product to produce If a product becomes very popular then competition among the consumers to obtain it will increase its price and increases profits earned by firms producing that product Entrepreneurs Will enter the market and increase production to meet the higher demand switching resources from the production of other products As entrepreneurs enter the market they can compete for customer drive the price back down to the level that is suitable and can come into an accord for them to remain in business
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