Microeconomics Notes - Microeconomics Notes A market is a...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Microeconomics Notes A market is a group of buyers and sellers of a particular good or service. The terms supply and demand refer to the behavior of people as they interact with one another in markets. Perfect Competition o Products are the same o Numerous buyers and sellers so that each has no influence over price o Buyers and sellers are price takers Monopoly o One seller, and seller controls price Oligopoly o Few sellers o Not always aggressive competition Monopolistic Competition o Many sellers o Slightly differentiated products o Each seller may set price for its own product Demand o Quantity demanded is the amount of a good that buyers are willing and able to purchase. o Law of Demand The law of demand states that, other things equal, the quantity demanded of a good falls when the price of the good rises There is a negative relationship between price and quantity demanded. o Change in Quantity Demanded Movement along the demand curve. Caused by a change in the price of a product. o Change in Quantity Demanded VS. Change in Demand Change in Demand A shift in the demand curve, either to the left or right Caused by any change that alters the quantity demanded at every price such as: o Consumer income o Prices of related goods o Tastes o Expectations o Number of buyers When there is an increase in income, the price remains constant, and the demand will rise.
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Consumer income As income increases the demand for a normal good will increase. As income increases the demand for an inferior good will decrease. Prices of related goods When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes. When a fall in the price of one good increases the demand for another good the two goods are called complements . Quantity Supplied is the amount of a good that sellers are willing and able to sell The Law of supply States that other things equal, the quantity supplied of a good rises when the price of the good rises. Supply schedule A table that shows the relationship between the price of the good and the quantity supplied. (Supply Curve) There is a positive relationship between price and quantity supplied. Market supply refers to the sum of all individual supplies for all sellers of a particular good or service. Graphically, individual supply curves are summed horizontally. Change in quantity supplied Movement along the supply curve Caused by a change in anything that alters the quantity supplied at each price. Demand Curve o Law of demand o Change in quantity demanded (Movement along the line) o Change in demand (Shift of the line) o Change in quantity demanded refers to movement along the line, which is caused by change in prices of the particular good.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern