Chapter 4 is all about markets and supply and demand. Competitive markets are groups with a lot of buyers and sellers so that not one person can influence the market. Perfectly competitive markets are markets where all goods are exactly the same and sellers are so numerous that no single person can make an impact. Price takers can buy all they want or sell all they want at a set price in a perfectly competitive market. Quantity Demanded is the amount of a good demanded. Law of demand is the quantity demanded of a good falls when a price of a good falls. Demand curve is the graph that shows the relationship between the price of a good and the quantity demanded. Market demand is the sum of all individual demands for a particular good or service. normal foods are a good for which other things equal an increase in income leads to increase in demand for these products. Inferior goods increase in income means decrease in these goods. Substitutes are two goods for which an increase in the price of one leads to a decrease in demand for the other. Compliments are two goods for which an increase in the price of one leads to a decrease in demand for the other.
No comments:
Post a Comment