ECN 104 Chapter Notes -Profit Margin, Economic Equilibrium, Inferior Good
14 Nov 2014
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Document Summary
A 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. There are many forms of markets, such as farmer s markets as well as those who sell ice cream in a town. Economists use the term competitive market to describe a market in which there are so many buyers and so many sellers that each has a miniscule impact on the market price. When selling wheat there are so many sellers (farmers) and some many purchasers (consumers) that neither has really any impact on the overall price of wheat. Quantity demanded: the amount of a good that buyers are willing and able to purchase. Law of demand: the claim that, other things equal, the quantity demanded of a good falls when the price of the good rises.
