Ch 4 outline - Chapter 4 outline: I. Markets and...

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Chapter 4 outline: I. Markets and Competition A. Definition of  market : a group of buyers and sellers of a particular good or  service. B. Definition of  competitive market : a market in which there are many buyers  and many sellers so that each has a negligible impact on the market price. C. Competition: Perfect and Otherwise 1. Characteristics of a perfectly competitive market: a. The goods being offered for sale are all the same. b. The buyers and sellers are so numerous that none can influence  the market price. 2. Because buyers and sellers must accept the market price as given, they  are often called "price takers." 3. Not all goods are sold in a perfectly competitive market. a. A market with only one seller is called a monopoly market. b. A market with only a few sellers is called an oligopoly. c. A market with a large number of sellers, each selling a product  that is slightly different from its competitors’ products, is called  monopolistic competition. D. We will start by studying perfect competition. II. Demand A. The Demand Curve: The Relationship between Price and Quantity Demanded 1. Definition of  quantity demanded : the amount of a good that buyers  are willing and able to purchase. 2. One important determinant of quantity demanded is the price of the  product.
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Quantity demanded is negatively related to price.  This implies  that the demand curve is downward sloping. b. Definition of  law of demand : the claim that, other things  equal, the quantity demanded of a good falls when the price  of the good rises . 3. Definition of  demand schedule : a table that shows the relationship  between the price of a good and the quantity demanded. Price of Ice Cream Cone Quantity of Cones Demanded $0.00 12 0.50 10 1.00 8 1.50 6 2.00 4 2.50 2 3.00 0 4. Definition of  demand curve : a graph of the relationship between the  price of a good and the quantity demanded. a.
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This note was uploaded on 08/31/2009 for the course EC 350 taught by Professor Sekelj during the Spring '08 term at Clarkson University .

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Ch 4 outline - Chapter 4 outline: I. Markets and...

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