Chap 4 Reading.docx - Econ Chapter 4 Reading Supply and demand the behavior of people as they interact with one another in competitive markets Market

Chap 4 Reading.docx - Econ Chapter 4 Reading Supply and...

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Econ Chapter 4 Reading Supply and demand: the behavior of people as they interact with one another in competitive markets Market: group of buyer and sellers of a particular good or service Competitive market (or perfect competition): a market in which there are so many buyer and so many sellers that each has a negligible impact on the market price o Lots of consumers & Lots of producers Both have identical goods/services Lead to price-takers Perfectly competitive market: goods offered for sale are all exactly the same and the buyers and sellers are so numerous that no single buyer or seller has any influence over the market price Monopoly: only one seller and the seller sets the price Quantity demanded: the amount of the good that buyers are willing and able to purchase at a given price Law of demand: when prices rise the quantity demanded falls, when prices lowers the quantity demanded rises; as price goes up the quantity consumers are willing to purchase goes down Demand schedule: a table that shows the relationship between the price and the quantity demanded Demand curve: the line relating the price and quantity demanded (sloping downward); movements are along the curve when price of the good

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