Professional Documents
Culture Documents
Topic-1
Introduction
Introduction
Two questions:
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the duty of protecting the society from the violence and invasion
of other independent societies;
Role of governments
Hence, these questions have been answered differently
through time.
They constitute the central theme of the subject!
A review
Supply of goods
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Demand curve
1.
Substitution effect;
2.
Income effect.
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Demand curve
P
(price)
Actual demand (Q = 5) if
price = 10
P=1
0
P=7.
5
Q=1
0
Q
(quantity)
8
Determinants of Demand
Income of consumers
Population
Preferences of consumers
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10
P
good1
P=1
0
P=7.
5
Dgood
Dgood 1
Q=
5
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Q=1 Q=1
0
2
Q=1
7
Q good1
11
P
good1
P=1
0
P=7.
5
Dgood
Dgood 1
Q=
5
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Q=1 Q=1
0
2
Q=1
7
Q good1
12
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13
P=1
0
P=7.
5
D
Q=
5
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Q=1 Q=1
0
2
D
Q=1
7
Q
14
P
good1
P=1
0
P=7.
5
Dgood
Dgood 1
Q=
1
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Q=3 Q=5
Q=1
0
Q good1
15
Consumer appreciates
good more
befo
re
after
P=1
0
P=7.
5
D
Q=
5
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Q=1 Q=1
0
2
D
Q=1
7
Q
16
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17
P
good1
P=1
0
P=7.
5
Dgood 1 =
Dgood 1
Q=
5
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Q=1
0
Q good1
18
Supply curve
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19
P
good1
Sgood 1
P=1
0
P=7.
5
Q=1
0
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Q=1
5
Q good1
20
Determinants of Supply
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21
P
good1
P=7.
5
befo
re
after
Q=1 Q=1
0
5
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Qgoo
d1
22
P
good1
Sgood 1
Sgood 1
P=7.
5
befo
re
after
Q=1 Q=1
0
5
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Qgoo
d1
23
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24
P
good1
Increase in price
good1
Sgood 1=
Sgood1
P=8
P=7.
5
befo
re
after
Q=1 Q=1
0
5
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Qgoo
d1
25
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26
Market Equilibrium
P
good1
Equilibrium price
= 7.5
Sgood
1
P=7.
5
Dgood
1
Q=1
0
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Qgoo
d1
27
P
good1
Sgood
1
P=7
P=6
Dgood
1
Q=5
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Q=2
0
Excess
demand
Qgoo
d1
28
P
good1
Sgood
1
P=8
P=7
Dgood
1
Q=5
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Excess
supply
Q=2
0
Qgoo
d1
29
P
good1
Increase in supply;
decrease in demand
Sgood
1
Sgood
P=7.
5
before
P=5
Dgood
after
Dgood
Q=1
0 Q=1
2
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Qgoo
d1
30