ECON 111 Lecture Notes - Lecture 4: Economic Equilibrium, Demand Curve, Perfect Competition
Document Summary
Chapter 4: the market forces of supply and demand. Economists use the model of supply and demand to analyze compeiive markets. In a compeiive market, there are many buyers and sellers, each of whom has litle or no inluence on the market price. The demand curve shows how the quanity of a good demanded depends on the price. According to the law of demand, as the price of a good falls, the quanity demanded rises. In addiion to price, other determinants of how much consumers want to buy include income, the prices of subsitutes and complements, tastes, expectaions, and the number of buyers. If one of these factors changes, the demand curve shits. The supply curve shows how the quanity of a good supplied depends on the price. According to the law of supply, as the price of a good rises, the quanity supply rises.
