ECON111 Lecture 9: WEEK 9 – Supply and Demand; Price-Taking and Competitive Markets

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Week 9 supply and demand: price-taking and competitive markets. Unit 8; supply and demand; price-taking and competitive markets. Outline: introduction (week 9, competitive equilibrium: key concepts (week 9, factors that affect equilibrium (week 10, perfect competition (week 10, introduction. Firms with market power can set their own price. Market outcomes are generally not pareto- efficient. (unit 7) when firms have market power they tend to withhold output and increase price. Model of interactions between price-taking firms and customers. Perfect competition = special case of the model. Similarities and differences between price-taking and price-setting firms: competitive equilibrium: key concepts. The existence of other firms inevitably reduces the market power that any particular firm has. Unit 7: we considered the case of a good produced and sold by just one firm. One seller with many buyers in the market for that product. This unit: we look at markets where many buyers and sellers interact.

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