ECN 204 Chapter Notes - Chapter 4: Economic Equilibrium, Demand Curve, Shortage
Document Summary
Chapter 4: the market forces of supply and demand. Market: is a group of buyers and sellers of a particular good or service. The buyers as a group determine the demand for the product, and the sellers as a group determine the supply of the product. Competitive market: a market in which there are many buyers and many sellers so that each has a negligible impact on the market price. Because buyers and sellers in perfectly competitive markets must accept the price that market determines, they are said to be price takers. Monopoly: when a market has only one seller and that seller sets the price. Quantity demanded: the amount of a good that buyers are willing and able to purchase (price plays an important role in determining demand = negatively related to the price) Law of demand: the claim that, other things equals, the quantity demanded of a good falls when the price of the good rises.