ECON101 Lecture Notes - Lecture 4: Economic Equilibrium, Shortage, Frozen Yogurt

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Olivia Mesta

Document Summary

4: the market forces of supply and demand. Supply and demand are the forces that make market economies work. They determine the quantity of each good produced and the price at which it is sold. The term supply and demand refer to the behaviour of people as they interact with one another. Market: a group of buyers and sellers of a particular good or service: the buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the produce. Competitive market: a market in which there are many buyers and many sellers so that each has a negligible impact on the marketplace. Each seller has limited control over their price because other sellers are offering similar produce. A seller has little reason to charge less than the going price, and if he charges more, buyers will make their purchases elsewhere.