Market

[!def]
The market for a good or service consists of all those producers willing and able to supply, and consumers is willing and able to buy.

Consumers demand goods which give them utility.

Marginal utility

Unit Utility gained Price willing to pay
1 5 $5
2 2 $2
3 1 $1
4 0.1 $0.1

Demand shifts

  • changes in the price of a complimentary good
  • Changing price of substitute
  • Technology
  • Change in real income (Economy)
  • Marketing
  • Change in fashion

Substitutes and Compliments

Complement are joint in demand
Substitutes can satisfy the same want

[!sticky | aqua s-95]
Substitute good: If the price of good X increases, the demand of y increases.

[!sticky | red s-95]
Complementary good: If the price of X increases, The demand of Y decreases.

Types of goods

Demand for a normal good increases when real income increases.
Demand for an inferior good decreases when real income increases.

Demand for a Veblen good increases when price increases. Because of consumers.
Demand for a Speculative good increases when the price increases. Because of investors

[!def] Market demand:
The sum of all individual demands

[!def] effective demand:
the willingness and ability of consumers to purchase goods at different prices.