ECON 2010 Lecture Notes - Lecture 5: Externality
1 Mar 2017
School
Department
Course
Professor
Document Summary
Advertising (madison avenue: attempt to change preferences, therefore changing demand. Religion: affects preferences (food, books, etc. ) Celebrity: roger federer/sponsors can influence taste. Government can regulate what sponsors are supported i. e. nike, but not marlboro. English: ascending price, last bidder wins. Dutch: descending price, first bidder wins, never results in a shortage or surplus. First price auction: highest bidder wins. Used to be known as the speculator". Economic theory is based off rational self-interest: people will take more rather than less (points to handler) Why is the seller always the greedy one: applies to both buyers and sellers. When a collective group of people decide not to shop somewhere. Economically, the goal of the group is normally achieved (market quantity falls) People say that costs alone drive price. Both affect price (shown by alfred marshall: scissors metaphor. A market transaction takes place, and it affects someone who is not engaged in the transaction (third party)
