Chapter 3 Summary

Chapter 3 Summary - Chapter 3 Summary - The supply and...

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Chapter 3 Summary - The supply and demand model illustrates how a competitive market, one with many buyers and sellers, none of whom can influence the market price, works. - The demand schedule shows the quantity demanded at each price and is represented graphically by a demand curve. The law of demand says that demand curves slope downward; that is, a higher price for a good or service leads people to demand a small quantity, other things equal. - A movement along the demand curve occurs when a price change leads to a change in the quantity demanded. When economists talk of increasing or decreasing demand, they mean shifts of the demand curve – a change in the quantity demanded at any given price. An increase in the demand causes a rightward shift of the demand curve. A decrease in demand causes a leftward shift. - There are five main factors that shift the demand curve: * A change in the price of related goods or services, such as substitutes or complements
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