INTBUS 6 Lecture Notes - Lecture 7: Excess Supply, Economic Equilibrium, Ceteris Paribus
22 Oct 2020
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Document Summary
Market: a group of economic agents who are trading a good or service plus the rules and arrangement for trading. A market may have a specific physical location (country, city, ) or not (gasoline market). Prices act as a selection device that encourages trade between the sellers who can produce goods at low cost and the buyers who place high value on the goods. Market price: if all sellers and all buyers face the same price. Perfectly competitive market: when (1) sellers all sell an identical good or service, and (2) any individual buyer or any individual seller isn"t powerful enough to affect the market price of that good or service. Price-taker: a buyer or seller who accepts the market price buyers can"t bargain for a lower price, and sellers can"t bargain for a higher price. Very few, if any, markets are perfectly competitive. But economists try to understand such markets anyway.
