Demand and Supply
Markets and Prices
The place where you find products and services is a market
- A market has two sides: buyers and sellers
- There are markets for goods and services, as well as resources and inputs
- Some markets are physical places where buyers and sellers meet and some markets are
groups of people spread around the world who never meet but connected through internet
or by phone.
- Most markets are unorganized collections of buyers and sellers
- Competitive market – a market that has many buyers and sellers, so no single buyer or
seller can influence the price
- Producers offer items for sale only if the price is high enough to cover their opportunity
- The price of an object is the number of dollars that must be given up in exchange for it.
Economists refer to this as money price
- The ratio of one price to another is called relative price, and a relative price is an
If you demand something, then you want it, can afford it, and plan to buy it.
- Wants are the unlimited desires or wishes that people have for goods and services
- Demand reflects a decision about which one wants to satisfy
- Quantity demanded of a good or service is the amount that consumers plan to buy
during a given time period at a