ᴘᴇʀғᴇᴄᴛʟʏ ᴄᴏᴍᴘᴇᴛɪᴛɪᴠᴇ ᴍᴀʀᴋᴇᴛs
10 - 14
mechanism that produces coordination is interaction of
supply and demand
actions of buyers and sellers determine price
buyers and sellers respond in predictable ways
mechanism that produces coordination is interaction of
supply and demand
actions of buyers and sellers determine price
buyers and sellers respond in predictable ways
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Market
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comprised of all buyers and sellers of a good or service
New York Stock Exchange, Chicago Mercantile Exchange
are highly organized
buyers come together, auctioneer set price
often markets are less formal
market for gas: seller-gas station, buyer-vehicle owner
highly competitive, no one buyer or seller determine price
perfectly competitive - service being bought and sold is highly
standardized, number of buyers and sellers is large
real world markets characterized by high competition
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Demand
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amount buyers are willing and able to purchase
most important factor is good's price
law of demand - negative relationship between good'd price
and quantity demanded
result of cost-benefit analysis
demand schedule - table
demand curve - downward sloping line
quantity - horizontal axis, price - vertical axis
add 2 demand curves horizontally to find market demand
amount buyers are willing and able to purchase
most important factor is good's price
law of demand - negative relationship between good'd price
and quantity demanded
result of cost-benefit analysis
demand schedule - table
demand curve - downward sloping line
quantity - horizontal axis, price - vertical axis
add 2 demand curves horizontally to find market demand
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Shifts in Demand Curve
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new bike system - quantity gas demanded decline at every
price, cause market demand curve to shift to left
demand positively related to income
normal good - income fall, quantity demanded fall
inferior good - income rise, quantity demanded fall
substitutes - decline in price of one good, reduction in quantity
demanded of another
complements - decline in price of one good, increase in demand
of another good
change expect to occur in future also affect demand
market demand derived by adding demands of individuals
more consumers, demand increase
new bike system - quantity gas demanded decline at every
price, cause market demand curve to shift to left
demand positively related to income
normal good - income fall, quantity demanded fall
inferior good - income rise, quantity demanded fall
substitutes - decline in price of one good, reduction in quantity
demanded of another
complements - decline in price of one good, increase in demand
of another good
change expect to occur in future also affect demand
market demand derived by adding demands of individuals
more consumers, demand increase
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Supply
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amount sellers willing and able to produce
law of supply - positive relation between price and quantity supplied
supply curve - upward sloping
input price falls, quantity supplied increase, curve shift left
technology - change affect how businesses operate and
quantity supplied
more sellers, more supplied quantity
amount sellers willing and able to produce
law of supply - positive relation between price and quantity supplied
supply curve - upward sloping
input price falls, quantity supplied increase, curve shift left
technology - change affect how businesses operate and
quantity supplied
more sellers, more supplied quantity
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