Microeconomics ch.4 notes
Microeconomics ch.4 notes ECO 106
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This 3 page Class Notes was uploaded by Lori Notetaker on Sunday March 6, 2016. The Class Notes belongs to ECO 106 at Pace University taught by Mark Weinstock in Spring 2016. Since its upload, it has received 18 views. For similar materials see Principles of Economics: Microeconomics in Economcs at Pace University.
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Date Created: 03/06/16
Chapter.4 notes Perfectly competitive market Amarket with many buyers and sellers of a homogeneous product and no barriers to entry. Quantity demanded The amount of a product that consumers are willing and able to buy. Demand schedule Atable that shows the relationship between the price of a product and the quantity demanded, ceteris paribus. Individual demand curve Acurve that shows the relationship between the price of a good and quantity demanded by an individual consumer, ceteris paribus. Law of demand There is a negative relationship between price and quantity demanded, ceteris paribus Change in quantity demanded Achange in the quantity consumers are willing and able to buy when the price changes; represented graphically by movement along the demand curve. Law of supply There is a positive relationship between price and quantity supplied, ceteris paribus. Market supply curve Acurve showing the relationship between the market price and quantity supplied by all ﬁrms, ceteris paribus. Individual ﬁrms As we saw earlier, a higher price encourages a ﬁrm to increase its output by purchasing more materials and hiring more workers. New ﬁrms In the long run, new ﬁrms can enter the market and existing ﬁrms can expand their production facilities to produce more output. Market equilibrium Asituation in which the quantity demanded equals the quantity supplied at the prevailing market price. Excess demand (shortage) Asituation in which, at the prevailing price, the quantity demanded exceeds the quantity supplied. Excess supply (surplus) Asituation in which the quantity supplied exceeds the quantity demanded at the prevailing price.
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