ECON 20A Lecture Notes - Lecture 4: Demand Curve, Market Power, Perfect Competition

99 views7 pages

whitewalrus574

18 Jan 2018

School

Department

Course

Professor

For unlimited access to Class Notes, a Class+ subscription is required.

Document Summary

A market is a group of buyers and sellers of a particular product. A competitive market is one with many buyers and sellers, each has a negligible effect on price. Buyers and sellers are so numerous that no one can affect market price - each is a price taker. In this chapter, we assume markets are perfectly competitive. The quantity demanded of any good is the amount of the good buyers are willing and able to purchase. Demand schedule: a table that shows the relationship between the price of an good and the quantity demanded. Notice that helen"s preferences obey the law of demand. The quantity demanded in the market is the sum of the quantities demanded by all buyers at each price. Suppose helen and ken are the only two buyers in the latte market. (qd = quantity demanded) The demand curve shows how price affects quantity demanded, other things being equal.

Related Questions

1. Markets and competition In a perfectly competitive market, all producers sell (perfectly identical/different) goods or services. Additionally, there are (few,many) buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price (takers,makers)

True or False: The market for lettuce does not exhibit the two primary characteristics that define perfectly competitive markets.

1. In a competitive market, the quantity of a product produced and the price of the product are determined by

a. buyers.

b. sellers.

c. both buyers and sellers.

d. None of the above is correct.

2. Which of the following statements is correct?

a. Buyers determine supply and sellers determine demand.

b. Buyers determine demand and sellers determine supply.

c. Buyers determine both demand and supply

d. Sellers determine both demand and supply

3. The demand for a good or service is determined by