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Beginning of Paper
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Explain what is meant by the term an economic model and outline a model of price and output determination in a free market. Examine the effect of a change in real disposable income on equilibrium price and output.
An economic model or theory is a simplified explanation and analysis of economic behaviour. It allows us to predict, and therefore intervene, if we do not like the outcome of a p ....
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Middle of Paper
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.... supply and demand.
When economists discuss demand, they mean effective demand, or how much people will want, and can afford to buy at any given price of a product. This means that demand is dependent on price. The graph above is a demand curve that illustrates that as price rises, demand falls. This enables movement along the curve, which we term an expansion or contraction of demand, depending on the direction of this movement. Like most economic models, it is simplifie ....
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ADDITIONAL FEATURED ESSAYS
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