ECON 1050 Lecture : Supply, Demand, and Equilibrium

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Competitive market: market with many buyers and many sellers so no single buyer or seller can influence price. Money price: the amount of money needed to buy a certain good. Relative price: the ratio of the money price of one good to the money price of the next best alternative good. If you demand something, then you want it, are able to afford it, and plan to buy it. Demand refers to the relationship between good price and quantity demanded. Wants: the unlimited desires or wishes people have for goods and services. Demand reflects a decision about which wants to satisfy. Quantity demanded: the amount of product that consumers plan to buy during a particular time period, and at a particular price. Reflects change in demand of a product as a result of a price change. Other things remaining the same, price of a good, quantity demanded. Substitution effect: relative price (opportunity cost) leads to search for substitute product.

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