AUECO101 Lecture Notes - Lecture 4: Demand Curve, Inferior Good, Normal Good

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Supply and demand refer to the behaviour of people as they interact with one another in competitive markets. Before discussing how buys and sellers behave, lets first consider more fully what we mean by a market and competition. Market: a group of buyers and sellers of a particular good or service. Competitive market: a market in which there are many buyers and many sellers so that each has a negligible impact on the market price. Quantity demanded: the amount of a good that buyers are willing and able to purchase (demand slopes always show down) Law of demand: the claim that, other things equal, the quantity demanded of a good falls when the price of the goods rises. Demand schedule: a table that shows the relationship between the price of a good and the quantity demanded. Demand curve: a graph of the relationship between the price of a good and the quantity demanded.

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