ECON 202 Lecture Notes - Lecture 2: Economic Equilibrium, Shortage, Demand Curve
7 Mar 2016
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Chapter 4 the market forces of supply and demand. Definition of market: a group of buyers and sellers of a particular good or service . In order to analyze a market you need to identify: characteristics of goods and/or services traded; agents (buyers and sellers); structure of the market (degree of competition). Markets can be highly organized (agricultural commodities) and less organized (ice cream in a town). A market is competitive if there are many buyers and many sellers and each has a negligible impact on market price. The above conditions imply that buyers and sellers are price takers and they must accept the price determined on the market. Monopoly is a market structure in which a single firm serves an entire market for a good that has no close substitutes. In a monopoly the seller sets the price. All other market structures are between perfect competition and monopoly.
