Chapter Four

Chapter Four - PRINCIPLES of MICROECONOMICS by N Gregory...

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PRINCIPLES of MICROECONOMICS by N. Gregory Mankiw (4 th Edition) Chapter Four Outline CHAPTER 4: THE MARKET FORCES OF SUPPLY AND DEMAND - Supply and demand are the forces that make market economies work. They determine the quantity of reach good produced and the price at which it is sold. Markets and Competition What is a market? - Market – A group of buyers and sellers of a particular good or service - The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product What is competition? - Competitive Market – A market in which there are many buyers and many sellers sof that each has a negligible impact on the market price - Perfectly competitive markets have 2 characteristics: o 1. The goods offered for sale are all exactly the same o The buyers and sellers are so numerous that no single buyer or seller has any influence over the market price - Monopoly A market in which there is only one seller and this seller sets the price Demand The Demand Curve: The Relationship between Price and Quantity Demanded - Quantity Demanded – The amount of a good that buyers are willing able to purchase - Law of Demand – The claim that, other things equal, the quantity demanded of a good
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Chapter Four - PRINCIPLES of MICROECONOMICS by N Gregory...

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