Lecture 4-Supply and Demand

Lecture 4-Supply and Demand - L ect ur e 4-Supply and...

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Lecture 4-Supply and Demand Key questions to address: What factors affect buyer’s demand for goods? What factors affect seller’s supply of goods? What is a market? What is competition? How does the demand and supply of a good determine its price and the amount of the good being sold? 1
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Supply and Demand Market : group of buyers and sellers of a particular good or service Competitive market : market with many buyers and sellers such that each has a negligible impact on the market price Perfectly competitive market : -all goods offered for sale are exactly the same Numerous buyers and sellers so that none can affect the market price-all are “price-takers” In this chapter, we assume all markets are perfectly competitive 2
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Supply and Demand Quantity demanded : the amount of a good that buyers are willing and able to purchase Law of Demand : Other things equal, when the price of a good rises, the quantity demanded of that good falls, and when the price of a good falls, its quantity demanded rises 3
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This note was uploaded on 06/03/2011 for the course ECON 224 taught by Professor Ozturk during the Fall '09 term at South Carolina.

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Lecture 4-Supply and Demand - L ect ur e 4-Supply and...

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