EC 201 Lecture Notes - Lecture 6: Demand Curve, De Beers, Perfect Competition
Document Summary
Ch4 the market forces of supply and demand. A market is a group of buyers and sellers of a particular good or service. Buyers determine the demand and sellers determine the supply. O(cid:373)e (cid:373)arkets are highly orga(cid:374)ized" e. g. ny e, na daq. Competitive market is a market in which there are so many buyers and sellers that each has a negligible impact on market price. We assume markets are perfectly competitive: goods offered for sale are exactly identical, buyers and sellers are so numerous that no individual has any influence on the market price (cid:862)price takers(cid:863) Monopolies have one seller and seller sets the price (cid:862)price makers(cid:863) e. g. Demand curve shows the relationship between price and quantity demanded. Amount of a good that buyers are willing and able to purchase. Law of demand: as price decreases, quantity demand increases and vice versa. Quantity demanded of a good falls when a price rises.
