ECON 100 Lecture Notes - Lecture 3: Pike Place Market, Perfect Competition, Demand Curve
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Document Summary
To reap the benefits of economic interaction (trade), there must be a way to allocate resources and exchange goods. We need some way to organize our economy (coordinate trade) Markets exist whenever goods and services are exchanged- the total economy is simply a collection of markets. The exchange of goods and services in a market economy happens through prices that are established in markets. Those prices change according to the level of demand for a product and how much is supplied. What is a market: market exist whenever goods and services are exchanged, buyers and sellers of a specific good or service come together to form a market. Competitive markets: exists when there are so many buyers and sellers that each has a negligible impact on the market price and output. Perfect competition (lots of buyers and sellers, but can"t influence price between one another) Assumptions are clearly very restrictive and apply exactly to few actual markets.
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