Microeconomics competitve markets

What is a market ?

A market is defines by the specific product being brough and sold (eg banana) a particularlocation and a point in time

Characteristics of Markets ( assumptions of supply and demand )4

1.We focus on supply and demand in a single market

2. All goods in the markts are identical

3. all goods sold in the markt sell for the same price and everyone has the same information.

4. There are many producers and consumers in the market

5. - they helps us evaluvate why markets are works and how markets are works in which way

Foundational economic priciples

1. Sarcity : makes market rise human behaiviors

( limited income, linited time )

2. Incentives: motivates a action it drives the underlying principles of economics

3. Rationality

4. Opportunity Cost

5. Marginal analysis decision making

Demand

the combined amount of a good thall all consumers in the market are willing to buy

Factors that affect demand + five factors that shifts of the demand curve

Price of (change in price we looking at quantity demanded a represention movement along the demand curve a shift in demand curve )

Five factors that shift the demand curve

1. Taste and preferences

2. Income

3. Related goods and their prices

4. Expected future price

5. Demographics and population

Graphing the demand curve ( Demand for Tomatoes)

at price of 5,How r consumers demand no tomatoes (choke price)

As the orice drops consumers increase their quantity demanded of tomatoes.

We dream a demand curve that connects alll the observed price quantity combinations

Graph explantion : A to B increases in the quantity demanded

How to represent the demand curve mathematically? using Tomatoes example

The demand curve on the Tomatoes example

Qd = 1,000 - 200P

The Qd is the quantity of tomatoes demanded ( in pounds) and the P is the price of tomatoes ( $/pound)

what is common in economics ?

to plot prices on the vertical axis

what is this P= 5- 0.005Qd

Solving the price as a function of quantity demanded yields the inverse demand curve

Changes in demand vs quantity demanded

Change in quantity demanded?

Change in the quantity demanded: a movement along the demand curve that occurs as a result of change in the goods price

The demand curve is graphed in two dimensions all other facyors are assumed constant

Changes in demand vs quantity demanded

Quantity demanded ?

Change in demand: a shift of the entire demand curve caused by a change in a determinant of demand other that the goods own price