ECON 1B03 Lecture Notes - Lecture 3: Inverse Demand Function, Market Power, Demand Curve
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ECON 1B03 Full Course Notes
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Demand, supply and market equilibrium topic 3. A group of buyers and sellers of a particular good or service. Supply & demand refer to the behaviour of people as they interact with one another in markets. Refers to the sum of all individual demands for a particular good or service. Refers to the sum of all individual supplies of a particular good or service. Perfectly competitive market: all goods are identical, firms can freely enter or exit the market, buyers & sellers are so numerous that no individual or firm can affect the market price, each is a price taker. Law of demand: other things being equal, when the price of a good rises, the quantity demanded of that good falls (cid:1) Income: normal good: when income increases, demand increases and vice versa. Most goods: inferior good: when income increases, demand decreases and vice versa.