ECON 2100 Lecture Notes - Lecture 3: Ceteris Paribus, Demand Curve, Carpool

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Published on 31 Aug 2016
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Chapter 4-The Market Forces of Supply and Demand
A competitive market is one with many buyers and sellers; each has a negligible effect on price.
We assume markets are perfectly competitive.
A perfectly competitive market: All goods exactly the same. There are so many buyers and
sellers that no one can affect the market price-each is a “price taker”
- Demand
The quantity demanded of any good is the amount of the good that buyers are willing and able
to purchase.
Law of Demand- the claim that the quantity demanded of a good falls when the price of a good
rises, other things equal.
-Demand Schedule- a table that shows the relationship between the price of a good and the
quantity demanded, ceteris paribus.
The Demand Schedule is helpful to a business and its production because they can gauge
whether the marketing price of the item is too high or too low. For example, the higher the price
of gas, the lower quantity demanded. The lower the gas price, the more quantity demanded. If
gas is too high, people will then try to carpool or try riding a bike instead.
- Here is an example of a table for a Demand Schedule for lattes:
Price
of
lattes
Quantity
of lattes
demanded
$0.0016
1.0014
2.0012
3.0010
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