Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
A model of a competitive market. This is a market in which there are many buyers and sellers of the same good or service. (key feature of a competitive market is that no individual’s actions have a noticeable effect on the price at which a good or service is sold) When a market is competitive, its behavior is well described by this model. Key elements 1. the demand curve 2. the supply curve 3. the set of factors that cause the demand curve to shift and the set of factors that cause the supply curve to shift 4. The market equilibrium, which includes the equilibrium price and quantity 5. the way the market equilibrium changes when the supply curve or demand curve shifts Demand Schedule Demand Curve Is a graphical representation of the demand schedule. It shows the relationship between quantity demanded and price. Quantity Demanded It shows how much of a product consumers are willing and able to buy at each of a series of possible prices during a specified time period. Is the actual amount of a good or service consumers are willing and able to buy at some specific price. Law of Demand The higher the price for a good or service leads consumers to demand less of that good or service 1.change in quantity demanded Movement along the demand curve because of a change in price all other factors being equal. 2. change in demand This causes the demand curve to shift either to the right or to the left. This happens not because of price but because of other factors. This leads to a new demand curve. When economists talk about an increase in demand they mean a rightward shift of the demand curve; at any given price consumers demand a larger quantity of goods or services When they talk about a decrease in demand they mean a leftward shift of the demand curve; at any given price consumers demand a smaller quantity of goods and services. What causes the demand curve to shift? There are 5 principal factors that cause a shift. Substitutes If a rise in the price of one good makes consumers more willing to buy the other good. Substitutes are usually goods that in some way serve a similar function A rise in the price of the alternative good induces consumers to buy the other good causing a change in demand. Complements Goods that in someway are consumed together. When the price of one good rises, the demand for its complement will decrease and the opposite it true. When consumers have more income, they are normally more likely to buy a good at any given price. Normal Goods The demand curve or these people will shift for most goods. The opposite is true. Why most goods? The demand for them increase when consumers income rises. Inferior Goods Goods that demand for decreases when consumers income rises. These goods are ones that are considered less desirable than more expensive alternatives, when people can they stop buying them Since people have certain preferences, or tastes, that determine what they choose to consume and that these tastes can change economists usually lump together changes in demand due to 1. fads 2. beliefs 3. cultural shifts Economist have little to say about the forces that influence consumers’ tastes. This has a large impact on demand. Consumers have some choice about when to make a purchases, current demand for a good is often affected by expectations about future price. Future income What else? As the number of consumer increases so will demand for goods and services As the number of consumers decreases so will demand.