ECON 1BB3 Chapter 4: Chap_4 Macro_demand

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Market = group of buyers and sellers of a certain good/service: buyers (group) determine the demand for the product, sellers (group) determine the supply of the product. Competitive market = market with so many buyers and sellers that each has a negligible impact on the market price. Assume markets perfectly competitive: the goods offered for sale are all the same, the guyers and sellers are so numerous that no single buyer/seller has any in uence over the market price. Must accept the price the market determines, thus buyers and sellers are price takers. Quantity demanded: amoutn that buyers are willing (& able) to purchase: heavily in uenced by the price of the good. Quantitiy demanded falls as the price rises. Individual demand: 2 buyers, drawing individual demand curves, to determine market demand, sum up the individual demand curves horizontally (add up the quantity of ice cream cones for a xed price)