01:220:102 Lecture Notes - Lecture 4: Shortage, Excess Supply, Fokker E.Ii

• School: Rutgers University
• Department: Economic
• Course: 01:220:102
• Professor: Daijiro Okada

Document Summary

Chapter 4: demand, supply, and equilibrium: markets, market - group of economic agents who are trading a good or service, and the rules and arrangements for trading i. Perfectly competitive market - sellers all sell an identical good or service and any individual buyer or seller isn"t powerful enough on his or her own to affect the market price. Demand schedule - table that reports the quantity demanded at different prices. Holding all else equal - everything other than the price of gas is held constant or fixed, including income, rent, and highway tolls: demand curve - plots the relationship between prices and quantity demanded i. ii. Negatively related - when one entity goes up, the other goes down. Law of demand - the quantity demanded rises when the price falls (holding all else equal: willingness to pay - highest price that a buyer is willing to pay for an extra unit of a good i.