Lecture Notes 2-16-10 - price b products are the same c...

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Notes: 2-16-10 Economics T-Th A. Ordonez Chapter 4 809-195-3K1C 2/16/10 Cptr. 4: The market forces of supply & demand Supply & demand are the two words that economists use most often Supply & demand are the forces that make market economies work Modern microeconomies is about supply, demand, and market equilibrium What is a Market? a market is a group of buyers and sellers of a particular good or service The terms supply & demand refer to the behavior of people as they interact with one another in markets o Buyers determine demand o Sellers determine supply What is competition? A competitive market is a market in which there are many buyers and sellers so that each has negligible impact on the market price Market Structures 1. Perfect competition a. numerous buyers and sellers so that each has no influence over the market
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Unformatted text preview: price b. products are the same c. buyers and sellers are price takers. (Ex. agriculture) 2. Monopoly a. One, single seller b. Unique product c. Seller controls price - price maker (Ex. WE Energies, US postal Service) 3. Oligopoly a. few sellers Notes: 2-16-10 Economics T-Th A. Ordonez Chapter 4 809-195-3K1C 2/16/10 b. products are similair c. varying price strategies d. price strategies depend upon how much market power each firm has (Ex. Diamond Industry, oil industry, Automotive Industry) 4. Monopolistic Competition a. many sellers b. slightly differentiated products c. each seller may set the price for its own product The Prisoners Dilemma Confess Stay Silent You me you me Confess 10 10 20 Stay Silent 20 1 1...
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