ECON 1 Lecture Notes - Lecture 4: Economic Surplus, Economic Equilibrium, Demand Curve
Document Summary
Markets and competition: supply and demand are the forces that make market economies work. Determine the quantity of each good produced and the price at which it is sold: market: group of buyers and sellers of a particular good or service. Sellers determine the supply of the product. Markets and competition: competitive market: a market with many buyers and sellers, where each has a negligible effect on the market price, perfectly competitive market: all goods are exactly the same. Total consumer surplus: sum of consumer surplus of all buyers. Demand shifters (price: cause a movement along the d curve: income. Normal good: a good for which other things equal, an increase in income leads to and increase in demand. Inferior good: a good for which other things equal, an increase in income leads to a decrease in demand: price of substitutes.
