Question

1-1. What is competition? A competitive market refers to a market in which there are so many buyers and sellers that each has impact on the market place There are other forms of markets: market, Oligopolistic market I-2. What is the Law of Demand? It states, when the price of a good goes up(down). people always buy of it, other things being equal 1-3. Shifts in Demand A good for which an increase in income leads to an increase in demand, is calledgood A good for which an increase in income leads to a decrease in demand, is called Two goods for which increase in price of a good leads to an increase in demand for the other, are called Two goods for which increase in price of a good leads to a decrease in demand for the other, are called good 1-4.What is the Law of Supply? It states, other things being equal, the quantity supplied of a good when the price of the good rises 1-5.Market Equilibrium There is a point at which the supply and the demand curves internect each other. This point is called the market The price at this intersection is called the and the corresponding quantity is called the price quantity 1-6.Rationing Fundlibe o Prjoise do eventually?

Answer 1

1-1. The question here is talking about a perfectly competitive market where large number of buyers and sellers exist, and they individually cannot affect or control the market place.

1-2. The demand curve is a negatively sloped curve, hence there is an inverse relation between quantity demanded and price charged. Thus as price goes up, quantity demanded falls (vice versa)

1-3. a) dX\dI>0. The increase in demand with increase in income is called Normal good

b)dX\dI<0. The decrease in demand with increase in income is called Inferior good

c)dx\dPy>0. These are called substitute goods.

d)dx\dPy<0.These are called complementary goods.

1-4. The supply curve is positively sloped. Thus price increases as quantity supplied increases.

1-5. a)equillibrium

b)equillibrium price

c) equillibrium quantity