ECF1100 Lecture Notes - Lecture 2: Sydney Fish Market, Economic Surplus, Normal Good
18 Jul 2018
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Week 2 - the market forces of supply and demand. A market is a group of buyers and sellers of a particular good or service. It may be highly organised, such as the sydney fish market, or less organised, such as the market for ice-cream in the town. Quantity demanded (qd): the amount of good that buyers are willing and able to purchase at a given price. The law of demand: holding everything else constant, when the price of a product falls, the quantity demanded will increase, and when the price of a product rises, the quantity demanded will decrease. Demand: as the price decreases, the quantity demanded increases. Willingness to pay: the maximum amount that a buyer will pay for a good. This is a measure of how much the buyer values the good or service. Consumer surplus: is the (cid:271)uyer"s willi(cid:374)g(cid:374)ess to pay for a good (cid:373)i(cid:374)us the amount the buyer actually pays for it.
