CAS EC 101 Chapter 4: The market forces for supply and demand, chapter 4.docx

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: All

Document Summary

The market forces for supply and demand: term supply and demand refer to the behavior of people as they interact with one another in competitive markets. What is a market: market is a group of buyers and sellers of a specific good or service, buyers determine demand for a product, sellers determine supply. The demand curve: the relationship b/t price and quantity demanded: quantity demanded of any good is the amount of the good that buyers are willing and able to purchase, price of a good plays central role in demand. Market demand vs. individual demand: market demand is the sum of individual demand. If something happens to alter quantity demanded at every given price, the demand curve shifts: demand shift to the right = increase in demand, demand shift to left decrease in demand. Important variables that shift demand curve: income. If demand falls for a good when income falls, the good is a normal good.