ECON 1B03 Chapter Notes - Chapter 4: Equilibrium Point, Demand Curve, Shortage

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Usman Hannan

Document Summary

Chapter 4: the market forces of supply and demand. Group of buyers (determine demand) and sellers (determine supply) of a particular good or service. Competitive market: there are many buyers and many sellers so that each has a negligible impact on the market price. Assume markets are perfectly competitive > the goods offered for sale are all exactly the same; buyers and sellers are so numerous that so single buyer or seller has any influence over the market price. Buyers and sellers must accept what prices the market determines, they are price takers. Some markets only have one seller in which they set the price, monopoly. The demand curve: the relationship between price and quantity demand. Quantity demanded: amount of good that buyers are willing and able to purchase. Quantity demanded in negatively related to the price (i. e. when one goes up the other goes down)