ECON1020 Lecture Notes - Lecture 2: Transaction Cost, Demand Curve, Perfect Competition
Document Summary
Chapter four: the market demand, supply and. The market is an institution where the buyers & sellers of the same good or service come together to trade. Different market structures cause market to behave in different ways. While these assu(cid:373)ptio(cid:374)s are (cid:862)u(cid:374)realisti(cid:272)(cid:863) simplifications, together they tell us what conditions need to be in place to make the market work well. They serve as a benchmark for the design and improvement of real markets. Demand comprises all those consumers willing and able to buy the product. Demand shows how much consumers plan to buy at every conceivable price. Quantity demanded (qd) refers to purchasing plans at one particular price (p) As the price rises, the quantity demanded falls & vice versa (because consumers are relatively worse off and substitute into other products. Demand curve: slopes downward steepness reflects consumer price sensitivity position reflects the volume of demand. Elasticity measures the responsiveness of quantity to one of its determinants.
