Microeconomics Unit 1

Topics: Supply and demand, Price elasticity of demand, Microeconomics Pages: 4 (969 words) Published: December 13, 2014


Unit 1 Assignment

Chapter 4

1. What is a competitive market? Briefly describe a type of market that is not perfectly competitive A competitive market is a market with many buyers and sellers trading identical products so that each buyer and seller is a price taker (Mankiw, p.66). Local energy provider is not a perfect market but a monopoly because there in only one provider.

2. What are the demand schedule and the demand curve, and how are they related? Why does the demand curve slope downward?

A demand schedule is a table that shows the relationship between the price of a good and the quality demanded and the demand curve is a graph of the relationship between the price of a good and the quantity demanded (Mankiw, p.67). Consumers always demand more of a good at lower cost which results in greater quantity demanded. Curve slopes downward because a lower price increase the quantity demanded (Mankiw, p.68).

3. Does a change in consumers’ taste lead to a movement along the demand curve or a shift in the demand curve? Does a change in price lead to a movement along the demand curve? Explain your answer. A change in consumers taste leads to a shift in the demand curve. Yes a change in price leads to movement along the demand curve. Any change that increase quantity demanded leads to shift in the demand curve which is an increase in demand (Mankiw, p.69).

5. What are the supply schedule and the supply curve and how are they related? Why does the supply curve slope upward? The supply schedule is a table that shows the relationship between the price of a good and the quantity supplied. The supply curve is a graph of the relationship between the price of a good and quantity supplied Mankiw, p.74).

7. Define the equilibrium of a market. Describe the forces that move a market toward its equilibrium. Market equilibrium is the point at which the supply and demand curves interests. Market...
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