ECON 1BB3 Chapter Notes - Chapter 4: Ceteris Paribus, Peanut Butter, Demand Curve

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Chapter 4 the market forces of supply and demand. Supply and demand refers to behaviour of people as they interact in competitive markets. Market: group of buyers and sellers of a particular good or service: buyers: determine the demand for the product, sellers: determiner supply of the product. Markets exist in many forms, from organized (agricultural commodities) or less ordered. Monopolistic competition: many sellers, many firms (similar to perfectly competitive markets); but products are not identical depending on the firm. Other things equal (ceteris paribus) the quantity demanded of a good falls a the price of the good rises. Demand table demand curve (table graphed) Words: when the price of pencils rises, people buy fewer pencils. Equation: q = 1200 40p where q = quantity demanded, p = price. Shows how much in the market is demanded at each price. Graphically: horizontal sum of curves (adding individual quantities at each price)