ECON 200 Lecture Notes - Lecture 4: Perfect Competition, Demand Curve, Reservation Price
11 Oct 2018
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Document Summary
In an economy such as the us economy, resources (inputs, goods, and services) are mostly allocated through markets. A market refers to the buyers and sellers who trade a particular good or service. (cid:12254) markets can be located locally, globally, or even virtually. One special class of markets is the competitive market. In this chapter, markets are assumed to be perfectly competitive. Four characteristics of perfectly competitive markets. (cid:12254) (cid:12254) (cid:12254) (cid:12254) Participants are price takers: no power to change price. Each participant is so small compared to the whole market that s/he cannot a ect the price. As a group, consumers determine the demand for a product. The quantity demanded is the amount of a particular good or service that buyers are willing and able to purchase at a given price. The law of demand states that the lower the price, the higher the quantity demanded, all other things equal.
