Topic 11 - Buying and selling Flashcards

1
Q

Endowment

A

(w1, w2) goods a consumer already has. An endowment with higher value is always preferred to one with a lower value.

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2
Q

Gross demands

A

The amount the consumer wants to consumer. Positive consumption quantities

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3
Q

Net demand

A

What the consumer buys or sells. (x1-w1,x2-w2) Minus endowment. This can be negative or positive.

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4
Q

Net buyer

A

If (x1-w1) > 0 then net buyer (net demander)

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5
Q

Net seller

A

If (x1-w1)< 0 then net seller or net supplier.

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6
Q

Decrease in endowment

A

If endowment decreases then there is less money from income from new endowment. Demand for good 1 falls if it is normal.

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7
Q

Increase in endowment

A

More money income from new endowment. Demand for good 1 rises if it is normal.

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