ECON 306 Lecture Notes - Lecture 1: College Town, Reservation Price, Demand Curve
31 Aug 2016
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Document Summary
A market for apartments in a college town. Models are simplifications of reality -- kept simple in order to gain insight into whatever it is you are trying to study. Some are close to the university, others are far away. Renters only care about price and location. Inner-ring apartments are more desirable for renters. A renter can only get an apartment from a landlord (note: this implies that no renters can sublet). Any renter who doesn"t get an inner-ring apartment can get an outer-ring. The price of an inner ring apartment is something that is tbd within the model. The quantity of inner-ring apartments which will be rented is something that is tbd within the model. Who gets to live in the inner-ring apartments is something that is tbd within the model. Optimization principle- people choose actions that are in their interests. Equilibrium principle- people"s actions must eventually be consistent with each other.
