MARKET 1 Lecture Notes - Lecture 32: Shortage, Perfect Competition, Market Clearing
Document Summary
The supply-and-demand model describes how consumers and suppliers interact to determine the quantity of goods sold in a market at a certain price. To use the model, we need to determine the buyers" behaviour, the suppliers" behaviour and how they interact. Prices of other goods: substitute (good similar to another), complement (good you. Etc. like to consume at the same time as the product you are considering buying) To determine how a change in price affects the quantity demanded, we make the assumptions that the other factors are constants and the consumers take the price of good as given and choose the quantity to consume. The quantity demanded is the amount of a good that consumers are willing to buy at a given price, holding constant the other factors that influence purchases. The quantity demanded can exceed the quantity actually sold.
