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EC120 Chapter Notes - Chapter 4: Perfect Competition, Demand Curve, Normal Good

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School
WLU
Department
Economics
Course
EC120
Professor
Ken Jackson

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EC120 Full Course Notes
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EC120 Full Course Notes
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Document Summary

Chapter 4 the market forces of supply and demand. If the demand for a good fall when income falls the good is a normal good. A normal good is a good for which an increase in income leads to an increase in demand, or a decrease in income creates a decrease in demand (directly related) If the demand for a good rises, when income falls the good is an inferior good. An inferior good is a good for which an increase in income leads to a decrease in demand, or a decrease in income leads to an increase in demand (inversely related: prices of related goods. When the fall in the price of one good reduces the demand for another good the two goods are called substitutes. A substitute are two goods in which an increase in the price of one leads to an increase in the demand for the other (directly related)

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Related Questions

A competitive market is one in which:

a. is only one seller, but many buyers. 

b. are many sellers, and each has the ability to set the price of his product. 

c. are many sellers and compete with one another in such a way that some sellers are always being forced out of the market. 

d. are so many buyers and so many sellers that each has a negligible impact on the price of the product. 

1. Markets and competition In a perfectly competitive market, all producers sell (perfectly identical/different) goods or services. Additionally, there are (few,many) buyers and sellers. Because of these two characteristics, both buyers and sellers in perfectly competitive markets are price (takers,makers)

True or False: The market for lettuce does not exhibit the two primary characteristics that define perfectly competitive markets.

In a competitive market, each seller has limited control over the price of his product because
 
a.other sellers are offering similar products.
b.in competitive markets, buyers have more influence over price than sellers.
c.the products sold in competitive markets are generally in abundant supply.
d.sellers in competitive markets prefer to meet and set a price that each will profit from.