EC120 Chapter Notes - Chapter 4: Second Cup, Economic Equilibrium, Perfect Competition
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EC120 Full Course Notes
Chapter 4: the market forces of supply and demand. The terms supply and demand refer to the behaviour of buyers and sellers. Market: a group of buyers and sellers of a particular good or service. Competitive market: a market in which there are many buyers and many sellers so that each has a negligible impact on the market price. The highest form of competition is a perfectly competitive market: the goods offered for sale are all exactly the same. The buyers and sellers are so numerous that no single buyer or seller has any in uence over the market price. Since buyers and sellers in a perfectly competitive market must accept the price the market determines, they are said to be price takers. The demand curve: relationship between price and quantity demanded. Quantity demanded: the amount of the good that buyers are willing and able to purchase.