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OU / Economics / ECON 1123 / What do you mean by relative price?

What do you mean by relative price?

What do you mean by relative price?

Description

School: University of Oklahoma
Department: Economics
Course: Principles of Economics-Micro.
Professor: Cynthia rogers
Term: Spring 2016
Tags: Micro Economics, Graphs, and OU
Cost: 25
Name: Micro Economics Pearson Textbook Ch 3 Notes
Description: Chapter 3 only!!! good annotations and highlights lots of graphs and visuals
Uploaded: 02/03/2016
7 Pages 192 Views 0 Unlocks
Reviews


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Economics 2.1 Practice Notes / Book Notes

  • Opportunity cost - decrease in quantity production of one good / increased in quantity production of another good
  • When you use all of your resources, to produce either good make → must produce less of other

Part 2, chapter 3: How markets workWe also discuss several other topics like What is Van Hoff Factor?

Demand / supply: market and prices

  • Market has a sides: buy / sell
  • Goods and services
  • Factors of production / inputs
  • Buy / seller meet or use internet
  • Competitive market - market with many buyers and sellers, no single buyer or seller can influence price
  • Producers only put out good sales if price is high enough to cover opportunity cost
  • Money price - dollars - given up to buy something
  • opportunity cost when you buy coffee is gum
  • opportunity cost of coffee is quantity of gum forgone
  • Calculate quantity of gum foregone from money prices of coffee and gum
  • Relative price - ratio of one price to another
  • Relative price = opportunity cost
  • Divide many price of a good by money price of basket of goods and services
  • Tell up opportunity cost of goods in terms of how much of the basket we give to buy it

(Price Index)We also discuss several other topics like What is meant by reliability in Sociological research?

Demand

  • Quantity demanded of good / service = amount that consumers plan to buy during a given time and price
  • Sometimes demand exceeds available
  • The law of demand - other things remaining the same, the higher the price, the smaller the demand and vice versa
  • Sub for the expensive → other goods used instead
  • Income effect → prices rise Relative to increase
  • Demand - entire relationship between price of good and quantity demanded of that good
  • Quantity demanded - {points} on curve!(at price)
  • Demand curve - relationship between quantity of demand and price at that point when all else stays the same
  • Demand schedule - the list of the data points
  • Willingness / ability to pay → measure of marginal / benefit
  • As quantity increases, marginal benefit of each additional unit falls
  • Highest price that someone will pay falls along curve
  • Any factor influences buying plans manages (besides price) = change in demand
  • Demand increase → curve shifts right, quantity demanded at each price is greater
  • Six factors cause this:
  1. Price of related goods → leads to sub / complement
  2. Expected future prices → buy and store, then sub
  3. Income → buying habits change
  4. Expected income (future) and credit
  5. Population → location, ages of population
  6. Preferences → value people place on stuff

Change in quantity demanded vs. change in demand

  • Change in influences on demand bring movement along demand curve or shift of the curve
  • A point on demand curve shows quantity demanded at a price
  • Market along curve → change in quantity demanded
  • Shift of entire curve → change in demand
  • Price of good changes with no other things changing
  • Price of goods stays the same, some other influences change
  • Change in demand
  • Example: more people work out = more need energy  bars
  • ways:
  1. Price of sub falls
  2. Price of complement rises (not even good itself)
  3. Income changes
  4. Expected price for future changes

Example graph: We also discuss several other topics like What is axiomatic probability?

We also discuss several other topics like What is a party caucus?
Don't forget about the age old question of What is a tendency of water to move in response to pressure?
If you want to learn more check out What are the uses of algortihms?

Supply

  • If firm has:
  1. Resources and technology
  2. Can profit
  3. Plans to produce and sell
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