3. Competitive Markets

3. Competitive Markets - Principles of Microeconomics Shomu...

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Principles of Microeconomics Shomu Banerjee Emory University Fall 2011 3. Competitive markets
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Competitive markets No single person believes that s/he can influence the market price Potential buyers: Potential sellers: Everyone is a price-taker
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Other assumptions Standardized (homogeneous) product Relatively short time period Specific geographical area Information is available instantaneously and costlessly
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Demand curve Maximum willing to pay Ali: $8 Bob: $7 Carl: $6 Don: $5 Eli: $4 Flo: $3 Gigi: $2 Quantity 0 5 10 5 Price 10
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Supply curve Minimum willing to accept Hal: $3 Ila: $3 Jon: $4 Kay: $5 Lee: $6 Matt: $6 Nell: $7 Quantity 0 5 10 5 Price 10
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A price P * is an equilibrium price if the quantity demanded at that price equals the quantity supplied at that price; this quantity Q * is the equilibrium quantity . Price
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This note was uploaded on 10/17/2011 for the course ECON 101 taught by Professor Dezhbakhsh during the Fall '07 term at Emory.

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3. Competitive Markets - Principles of Microeconomics Shomu...

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