ECO 120 Lecture Notes - Lecture 28: Demand Curve, Perfect Competition, Root Mean Square
Document Summary
A group of buyers and sellers of a particular good or service. Buyers: determine the demand for the product. Sellers: determine the supply of the product: price mechanism: the decisions taken by buyers and sellers interact to determine the allocation of scarce resources between competing uses. Markets and competition: assumption, perfectly competitive market- a market in which: All the products are identical: buyers (consumers) and sellers (the rms) are price-takers. Change in quantity demanded: change in quantity demanded- a movement along the same demand curve, due solely to change in price, all other things are constant. What affects demand for a product: variables that can shift (change) market demand curve, the consumer"s income, prices of related products, the tastes and preferences of the consumer, the consumer"s expectations about the future, number of buyers. Ex: fast food can be considered an inferior good because demand increased as income fell.
