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September 20 - Markets and competition o A market is a...

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September 20, 2010 Markets and competition o A market is a group of buyers and sellers of a particular product o A competitive market is one with many buyers and sellers, each has a negligible effect on price o In a perfectly competitive market All goods exactly the same Buyers and sellers so numerous that no one can affect market price- each is a “price taker” In this chapter, we assume markets are perfectly competitive Demand o The quantity demanded of any good is the amount of the good that buyers are willing and able to purchase o Law of demand The claim that the quantity demanded of a good falls when the price of the good rises, other things fall The demand sceduale o A table that shows the relationship between the price of a good and the quantity demanded Graph o Quantity is the horizontal axis o Price is the vertical axis Market demand vs individual demand o The quantity demanded in the market is the sum of the quantities demanded
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