ECON 1120 Lecture Notes - Lecture 3: Takers
27 Jun 2016
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Document Summary
Exchange rates - based off internal marginal opportunity costs and external opportunity costs. Simple model of a free market economy: Market - collection of buyers and sellers organized for the purpose of exchanging goods and services for money (can be global, national, regional, or local depending on the item being bought and sold). Each item traded is identical to all others. All buyers/sellers have full and symmetric information. Law of one price prevails (cannot individually impact aggregates) No one buyer can move the price up or down. All buyers and sellers are price takers . Perfectly competitive markets are unlikely to exist. Pop = population in market or market size. The demand curve (verbal) - describes the relationship between a good"s price and the maximum quantity that buyers are willing and able to buy at that price, ceteris paribus. Qxd = f(px) given ps, pc, i, t&p, pop.
