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The Market System
Market consists of:
Consumers - create a demand for a product
the amount consumers desire to purchase at various
Not what they will buy, but what they would like to
Effective demand ­ must be willing AND able to
pay…read more

Slide 3

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Individual and Market Demand
Market demand ­ consists of the sum of all
individual demand schedules
in the market
Represented by a demand curve
At higher prices, consumers generally willing to
purchase less than at lower prices
Demand curve ­ negative slope, downward
sloping from left to right…read more

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The Demand Curve
Price (£) The demand curve slopes
downwards from left to
right (a negative slope)
indicating an inverse
relationship between price
and the quantity
£10 demanded. Quantity
demanded will be higher
at lower prices than at
higher prices. As price
falls, quantity demanded
rises. As price rises,
quantity demanded falls.
100 150
Quantity Demanded (000s)…read more

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The Demand Curve 2
The level of demand ­
determines where on the graph it sits
Low demand ­
nearer the origin
High demand ­
further from the origin (assuming same scale)
Dependent on a variety of factors
Demand curve moves in response
to changing factors…read more

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The Demand Curve 3
Factors influencing demand:
Prices of other goods ­ substitutes and
Incomes ­ the level and distribution
of income
Tastes and fashions
The level and structure of the population
Expectations of consumers…read more

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