ECON 1011 Lecture Notes - Lecture 2: Demand Curve, Perfect Competition, Takers
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ECON 1011 Full Course Notes
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Document Summary
The behavior of buyers and sellers in a free market economy determines what gets produced, how it is produced, and who gets it. Pure free markets do not exist all market systems are mixed. Buyers and sellers do not get to freely interact with the market. A competitive market is one with many buyers and sellers, each has a negligible effect. Many small buyers and sellers, not one has a huge amount of power over the on price market and prices price takers (must accept prices) In a perfectly competitive market all goods are exactly the same. Quantity demanded the amount of the good that buyers are willing and able to purchase at a given price. Law of demand qd falls when the price rises and qd rises when prices fall. Income effect- change in the qd of a good that results from the effect of a change in good"s price relative to the consumers purchasing power.
