Microeconomics: Chapter 4

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Microeconomics: Chapter 4

The Market Forces Of Supply And Demand

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Define a market.
A group of buyers and sellers of a particular good or service.
What is a competative market?
One in which there are so many buyers and so many sellers that each ahs a negligable impact on the market price.
What is the law of demand?
The claim that, other things equal, the quantity demanded of a good falls when the price of the good rises.
Define quantity demanded.
How does it differe from a change in demand?
The amount of  the good that buyers are willing and able to sell.
Quantity demanded is brought about exclusively by a change in price.
Change in demand is when the whole demand curve shifts- caused by other deterinants that are not price
Name at least 3 demand curve shifters.
Changes in:
-The number of buyers
-Prices of related goods
-Tastes or preferences 
Name at least 3 influences on supply.
-Price of the good
-Prices of resources needed to produce it
-Prices of related goods produced
-Expected future prices
-Number of suppliers
If the price of a good or service increases then the quantity supplied will:
A) Increase
B) Decrease
A- Increase
*Increase in price is an incentive to increase production
Define equilibrium
When price has reached the level where quantity supplied is equal to quantity demanded.
When is there a surplus?
When quantity supplied is greater than quantity demanded.