Answer to Question #280934 in Microeconomics for Aman

Question

1. What is a competitive market? Briefly describe a type of market that is not perfectly competitive. 2. What are the demand schedule and the demand curve, and how are they related? Why does the demand curve slope downward?3. Does a change in consumers’ tastes 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 or a shift in the demand curve? 4. Popeye’s income declines, and as a result, he buys more spinach. Is spinach an inferior or a normal good? What happens to Popeye’s demand curve for spinach? 5. What are the supply schedule and the supply curve, and how are they related? Why does the supply curve slope upward? 6. Does a change in producers’ technology lead to a movement along the supply curve or a shift in the supply curve? Does a change in price lead to a movement along the supply curve or a shift in the supply curve?

Answer 1

1.Competitive marketplaces exist when the supply of commodities produced equals the demand for those items. When enterprises are price takers rather than price makers, which means they must set prices based on market conditions, you have competitive markets. Monopolies and oligopolies are types of imperfect competition. In addition, imperfect competitive markets can arise where there is only one supplier who determines the price, such as a local television station.

2.A demand schedule is a table that depicts the link between a commodity's price and the quantity demanded for that commodity. The demand curve is drawn using a demand schedule. The locus of every point of amount sought and price of the commodity is the demand curve.

The inverse relationship between price level and quantity demanded is the cause of a downward sloping demand curve. When the price of a commodity rises, so does the amount requested, and vice versa.

3.A shift in the demand curve results from a shift in consumer preferences, whereas a change in the price of the good results in movement along the demand curve. 

4.In this case, spinach is an inferior good and Popeye's demand curve will shift to the right.

5.A supply schedule is a table that displays how much of each item is available for each price. A supply curve is a graph that depicts the number of goods available at various prices.

The profit motive is the primary reason behind a supply curve's rising slope. When the market price of a good rises in response to increased demand, it becomes more profitable for businesses to respond by expanding output.

6.A change in producers’ technology leads to a shift in the supply curve while a change in price will lead to a movement along the supply curve.