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Lecture 5

EC120 Lecture Notes - Lecture 5: Market Power, Demand Curve, Perfect Competition


Department
Economics
Course Code
EC120
Professor
All
Lecture
5

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
Chapter 4: The Market Forces of Supply and Demand
A market !"!
Compeve market #$!
$!$!
Perfectly compeve market
-%$
-&$!'!$!!(price taker
-)$$!!$ "
Demand
$$"
Quanty demanded $#
!!$* $!!
Law of demand: +*,* $#!
##$!"
Demand schedule-# #!./0
PRICE = quanty demanded, 01%12!$
Shi+s
3!$$$4$
$2!$25!"
0'$!!!!2$"$along!"5
6 Number of buyers-!$!!* $
!!#!5!"
2. Income
-0$normal good  "!$-!!$!!
/0!!5$!"+7!,
-0$inferior good "!$-!!$5
$!"5$!$$##!8
3. Prices of related goods
- substutes!!!!$
- complements !!$+,
4. tastes-!5##!$
5. expectaons-'!!$4!
-7!!$$$! "
-!$#9!$
Supply
!$$"
quanty supplied $#"!$
* !!
law of supply: +*,* #!
#!"
supply schedule:# #!* 
PRICE = quanty supplied, 01%1:2
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