The Market Forces of Supply Demand

Economics

Supply and demand

the behavior of people as they interact in competitive markets.

Market

group of buyers and sellers of a good or service; buyers determine demand, sellers determine supply

Competitive market

market where there are so many buyers and sellers that each has little effect of the market price

perfectly competitive market

1) goods offered for sale are all exactly the same, and 2) buyers and sellers are so numerous that no one has any influence over the market price

Quantity demanded

the amount that buyers are willing and able to purchase.

law of demand

other things being equal, when the price of a good rises, the quantity demanded falls, and when the price falls, the quantity demanded rises

market demand

the sum of all the individual demands for a particular good or service.

factors that determine demand

income, price of related goods, tastes, expectations, number of buyers, summary