Lecture_Notes_2 - Demand and Supply CHAPTER 2 COMPETITIVE MARKETS A Market A market is any arrangement that bring buyers and sellers together A

Info iconThis preview shows pages 1–16. Sign up to view the full content.

View Full Document Right Arrow Icon
Demand and Supply CHAPTER 2
Background image of page 1

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

View Full DocumentRight Arrow Icon
COMPETITIVE MARKETS A Market: A market is any arrangement that bring buyers and sellers together. A market might be a physical place or a group of buyers and sellers spread around the world who never meet. In this competitive market there are so many buyers and so many sellers that no individual buyer or seller can influence the price.
Background image of page 2
2.1 DEMAND Quantity demanded: The amount of a good, service, or resource that people are willing and able to buy during a specified period at a specified price. The quantity demanded is an amount per unit of time. For example, the amount per day or per month.
Background image of page 3

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

View Full DocumentRight Arrow Icon
2.1 DEMAND Law of Demand: The Law of Demand states that, other things remaining the same, if the price of a good rises, the quantity demanded of that good decreases. If the price of the good falls, the quantity demanded of that good increases.
Background image of page 4
2.1 DEMAND Demand and Demand Curve Demand The relationship between the quantity demanded and the price of a good when all other influences on buying plans remain the same. Demand curve It shows the relationship between the quantity demanded of a good and its price when all other influences on buying plans remain the same.
Background image of page 5

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

View Full DocumentRight Arrow Icon
2.1 DEMAND
Background image of page 6
Background image of page 7

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

View Full DocumentRight Arrow Icon
2.1 DEMAND Changes in Demand A change in the quantity that people plan to buy when any influence other than the price of the good changes. A change in demand means that there is a new demand schedule and a new demand curve.
Background image of page 8
2.1 DEMAND Figure 2.3 shows changes in demand. 1. When demand decreases, the demand curve shifts leftward from D 0 to D 1 . 2. When demand increases, the demand curve shifts rightward from D 0 to D 2 .
Background image of page 9

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

View Full DocumentRight Arrow Icon
Background image of page 10
2.1 DEMAND The main influences on buying plans that change demand are Prices of related goods Income Expectations Number of buyers Preferences
Background image of page 11

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

View Full DocumentRight Arrow Icon
2.1 DEMAND Prices of Related Goods Substitute A good that can be consumed in place of another good. For example, apples and oranges. The demand for a good increases , if the price of one of its substitutes rises . The demand for a good decreases , if the price of one of its substitutes falls .
Background image of page 12
2.1 DEMAND Complement A good that is consumed with another good. For example, ice cream and fudge sauce. The demand for a good increases , if the price of one of its complements falls . The demand for a good decreases , if the price of one of its complements rises .
Background image of page 13

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

View Full DocumentRight Arrow Icon
2.1 DEMAND Income Normal good A good for which the demand increases if income increases and demand decreases if income decreases. Inferior good A good for which the demand decreases if income increases and demand increases if income decreases.
Background image of page 14
2.1 DEMAND Expectations Expected future income and expected future prices influence demand today. For example, if the price of a computer is
Background image of page 15

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

View Full DocumentRight Arrow Icon
Image of page 16
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 06/21/2011 for the course ECON 201 taught by Professor Staff during the Spring '08 term at Northern Virginia Community College.

Page1 / 56

Lecture_Notes_2 - Demand and Supply CHAPTER 2 COMPETITIVE MARKETS A Market A market is any arrangement that bring buyers and sellers together A

This preview shows document pages 1 - 16. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online