Textbook Notes (368,558)
Canada (161,962)
Economics (747)
ECON 1B03 (303)
Chapter 4

Econ 1B03 Chapter 4 Part 1.docx

4 Pages
Unlock Document

Hannah Holmes

Richard Damra Thursday, January 17, 2013 Econ 1B03 – Chapter 4 Supply and Demand Markets  Market: group of buyer and sellers of a particular good or service  The terms supply and demand refer to the behavior of people as they interact with one another in markets.  Market demand: refers to the sum of all individual demands for a particular good or service  Market supply: refers to the sum of all individual supplies of a particular good or service.  There are different types of market structures o Competitive market: so many buyers and sellers that each one has a negligible (if any) impact on market price o Perfectly competitive market: all goods are homogenous (identical) o Since no buyer or seller can influence price, each is a price taker. We will assume markets are perfectly competitive Demand  Quantity demanded, Qd: amount of good or service that consumers are willing and able to buy at a given price, P.  When the price of a good increase, you buy less of that good  We say that price and Qd are negatively related  As Price increase Qd decrease  Law of Demand o Other things being equal (ceteris paribus), when the price of a good rises, the quantity demanded of that good falls. Other Determinants of Demand  Income: o Normal good: When income increase and you buy more of that good (or if income decrease you buy less) o Inferior good: When income increase and you buy less of that good (or if income decrease you buy more)  Most goods are normal goods. Examples of inferior goods include Kraft Dinner (as your income increases, you don’t have to eat KD anymore- you can afford steak) and bus rides (as income increases, you can take a cab or buy a car). Prices of related goods  1. Substitutes: if Price of a good increases and the demand of another good then increases, these are substitutes Richard Damra Thursday, Janua
More Less

Related notes for ECON 1B03

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.