Competitive Market: has many buyers and sellers of the same goods and services, none of whom can influence the price

1. Agricultural produce

3Key elements of the market:

1. Sellers (supply the product) (factors that shift supply)

2. Buyers (bring the demand) (factors that shift demand)

3. Market equilibrium (changes in market equilibrium)

Supply: the quantity of a good and/or service that producers are willing and able to offer for sale at each possible price during a certain time period

Paintings market

Supply Schedule:

Globalization - a process by which the economies of the world become more integrated by the free flow across national boundaries of goods, investment, finances, and labor

Market economy

Demand: the quantity of a good or service that buyers are willing to and able to buy at all possible prices during a certain time period

Law of demand: as the price of a good increases, the quantity demand of that good decreases

• Movement along the down curve

a→B price decrease leads to increase in quantity demanded

B→ a price increase leads to decreases in quantity demanded

What causes the demand curve to shift

• Increase in population

• Change in income

Increase in demand

Change in income

Normal good: demand increases when income increases

• Most common

Inferior good: demand decreases when income increases

• Demand less

• Genetic engineered food

• Used cars

• Discount clothing

• Canned food

• All seen as bad

Change in prices of related goods and service

Substitute: two goods are substitutes, a decrease in the price of one leads to a decrease in demand for another

• Coke v pepsi

• Usually serve similar functions

complements: two goods are complements a decrease in the price of one good leads to an increase in the demand for the other

• Smartphones and apps

• Usually consumed together

Law of demand - as the price of a increases the quantity demanded of the that good decreases

Equilibrium - Qd=Qs - quantity demanded=quantity supplied

Demand schedule, supply schedule

Chocolate bar market

What happens if demand curve shifts -

Demand decreases e, Qe, Pe

Supply increase pe down qe up