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A market is an institution or mechanism which brings together buyers and sellers of particular goods and services. ◦ May be local, national, or international. ◦ In order to be competitive, markets must have large numbers of buyers and sellers. A schedule which shows the various amount of a product that consumers are willing, and able to buy at different prices. As price increases, quantity demanded decreases. ◦ Inverse relationship between price (p) and quantity (q). ◦ Only works for normal goods not inferior ones. Income effect – lower prices leave consumers with more money left over, and ability to purchase more. Substitution effect – as the price of a good goes up, consumers will switch over to substitutes. Downward slope indicates inverse relationship between price and quantity demanded. Entire schedule shifts right (increase) or left (decrease). Caused by determinants of demand. Tastes – Income Market size – Expectations – Related Goods – Substitutes – i.e. butter vs. margarine Complements – go together i.e. peanut butter and jelly.