ECN 104 Lecture Notes - Lecture 3: Market Clearing, Comparative Statics, Economic Equilibrium

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Market: where the buyers meet the sellers of a particular good or service. Supply and demand: refer to the behaviour of people as they interact with one another in markets. Market demand: sum of all individual demands for a particular good or service. Market supply: sum of all individual supplies of a particular goods or service. Buyers and sellers are so numerous that no one can affect the market price each is a price taker. Quantity demanded, qd: is the amount of a good or service that consumers are willing and able to buy at a given price. When the price of goods increases, you buy less of that good (demand falls) The law of demand: other things being equal, when the price of a good rises, the quantity demanded of that good falls. Normal good = fresh orange, inferior good = canned orange.

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