3.  A market is an institution or mechanism which brings together buyers and sellers of particular goods and services. ◦ May be local, national, or international. ◦ In order to be competitive, markets must have large numbers of buyers and sellers.

4.  A schedule which shows the various amount of a product that consumers are willing, and able to buy at different prices.

5.  As price increases, quantity demanded decreases. ◦ Inverse relationship between price (p) and quantity (q). ◦ Only works for normal goods not inferior ones.

6.  Income effect – lower prices leave consumers with more money left over, and ability to purchase more.  Substitution effect – as the price of a good goes up, consumers will switch over to substitutes.

7.  Downward slope indicates inverse relationship between price and quantity demanded.

8.  Entire schedule shifts right (increase) or left (decrease).  Caused by determinants of demand.

9.  Tastes –

10.  Income

11.  Market size –

12.  Expectations –

13.  Related Goods –  Substitutes – i.e. butter vs. margarine  Complements – go together i.e. peanut butter and jelly.