ECO 1104 Lecture Notes - Lecture 4: Monopolistic Competition, Shortage, Product Differentiation

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: Gordon Lenjosek

Document Summary

Chapter 4: the market forces of supply and demand. Markets for many agricultural commodities: less organized, e. g. In a perfectly competitive market: all goods are exactly the same (homogeneous), buyers and sellers are so numerous that no one can affect the market price. Each is a price taker: not all goods and services are sold in perfectly competitive markets, monopoly: only seller in the market and this seller sets the price. Market versus individual demand: the quantity demanded in the market is the sum of the quantities demanded by all buyers at each price, market demand: the sum of all the individual demands for a particular good or service. Tastes: anything that causes tastes (or preferences) to favour a good will increase the demand for that good, and shift its demand curve right. Causes a movement along the demand curve (a change in the quantity demanded) Shifts the demand curve (a change in demand)