ECON 203 Lecture Notes - Lecture 1: Perfect Competition, Budget Constraint, Demand Curve
Document Summary
Consumers supply payments to firms final goods market. Firms supply goods and services to consumers final goods market. Consumers supply to firms: land, labor, capital, enterprise factor market. Firms supply to consumers: wage, profit, returns, rent factor market. Everything flows through markets: 3 kinds final goods, factor & intermediate: final goods: buyers are consumers sellers are firms, intermediate market: firms are buyers and sellers, factor market: buyers are firms sellers are consumers. 4 general categories of characteristics: (general equilibrium model or. Walrazian model: consumers have tastes or preferences, and the technology that you take as fixed. If either of these changes then you change the model: consumers and firms make decisions based on maximization or minimization (usually profit, all markets are perfectly competitive. Small buyers and sellers: the market forces equilibrate demand with supply. Class note 6 all the assumptions we make about preference. {(x,y) : xpx + ypy is less than or equal to m} budget set budget constraint.
