ECON 2010 Chapter Notes - Chapter 4: Inferior Good, Perfect Competition, Invisible Hand

• School: CU-Boulder
• Department: Economics
• Course: ECON 2010
• Professor: Alexander Hill

Document Summary

Supply and demand are the forces that make market economies work. They determine the quantity of each good produced and the price at which it is sold. The terms supply and demand refer to the behavior of people as they interact with one another in competitive markets. 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. A competitive market is a market in which there are many buyers and many sellers so that each has a negligible impact on the market price. Because buyers and sellers in perfectly competitive markets must accept the price the market determines, they are said to be price takers. Some markets have only one seller, and this seller sets the price. 4-2a the demand curve: the relationship between price and quantity demanded.