CAS EC 101 Chapter Notes - Chapter 4: Market Clearing, Shortage, Heat Wave

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Todd Idson

Document Summary

Supply and demand are two words economist use most. Determine quantity of each good produced and price at which it"s sold. Determines prices in a market economy and how prices then allocate the economy"s scarce resources. Behavior of people as they interact with one another in competitive markets. Market : group of buyers and sellers of a particular good or service. Markets can be highly organized (markets for agriculture) or less organized (market for ice cream) Price and quantity are determined by all buyers and sellers as they interact in marketplace. Competitive market: there are so many buyers and so many sellers that each has a negligible impact on the market price. We assume that markets are perfectly competitive- to reach this highest form of competition - must have 2 characteristics) Goods offered for sale are all the same. There are so many buyers and sellers that not one single buyer or seller has influence over market price.