Economics ECON S - 1920 Lecture Notes - Lecture 1: Perfect Competition, Demand Curve, Economic Equilibrium
Document Summary
Economics chapter 4: demand, supply & equilibrium: markets. Market price: sellers and buyers face same price. Price-taker: buyer or seller who accepts market price: buyer"s behaviour. Quantity demanded: amount of good that buyers are willing to purchase at given price. Demand schedule: table that reports quantity demanded at different prices, holding all else equal. Holding all else equal: everything else in economy is held constant. Demand curve: plots quantity demanded at different prices. Aggregated demand curve: individual demand curves/individual behaviours added up. Aggregated quantity demanded: price stays fixed and quantities of all buyers are added up. Market demand curve: sum of individual demand curves of all potential buyers, plots relationship between total quantity demanded and market price. Negatively related variables: variables move in opposite directions (one goes up, one down) Law of demand: quantity rises if price falls. Willingness to pay: highest price that buyer is willing to pay for extra unit of good (marginal unit)
