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CHAPTER 2 MODELING THE MARKET PROCESS

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Question;1. Producers? decisions are modeled through the demand;function, and consumers? decisions are captured by the supply function.;2. Two characteristics of a private good;are rivalry in consumption and excludability.;3. A change in price results in a shift in;the demand curve.;4. The demand price represents the;consumer?s willingness to pay for the good.;5. Conventionally, the graph of demand uses the inverse form of;the demand function, which is P = f(QD).;6. Market demand for a private good is found by vertically;summing individual demands.;7. The supply curve is positively sloped because marginal cost;(MC) rises with output (Q).;8. If QS = ?10 + ? P, the slope of supply, when;conventionally graphed, is +?.;9. Equilibrium price is the price level at which QD equals QS.;10. If the price level is such that quantity supplied exceeds;quantity demanded, there is excess demand, or a shortage in the market.

 

Paper#54961 | Written in 18-Jul-2015

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