EC120 Lecture Notes - Lecture 3: Demand Curve, Perfect Competition, Inferior Good
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EC120 Full Course Notes
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Incomes, population, preferences: prices of other products (interest rates) Group of buyers and sellers of a good or service. Organized (stock market), or disorganized (baby sitting) Size of market depends on nature of good. Key issue for government policy canadian competition bureau. Competitive markets require that there are many buyers with free choice: homogeneous products no brand differentiation, numerous buyers and sellers. If there is only one seller monopoly. If there are a few sellers oligopoly. Perfect competition is rare but a useful starting point. Quantity demanded: amount of a good buyers are willing and able to purchase at a given price. Law of demand: as price rises, quantity demanded falls. Demand schedule: table showing the relationship between price and quantity demanded. Demand curve: graph of the demand schedule. Market demand versus individual demand: market demand adds up individual demand, summing individual demand curves horizontally. Key difference changes in demand, or in quantity demanded.
