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| The study of how mankind allocates its relatively scare resources to satisfy its virtually insatiable wants |
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| maximum price consumers are willing to pay for a quantity of goods and services |
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| minimum price a producer must receive for a quantity of goods and services |
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as income goes up we cut them away
E.X. Ramon Noodles |
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| Price of an object compared to price of other related goods that perform the same task or service |
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Items that are different but serve the same purpose
E.X. Chicken/beef |
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| Relationship between variables is implied |
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| Shows exact relationship between variables |
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| The actual goods you take home |
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| The number on your pay check |
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| Max rise of nominal income with rising price of goods and services |
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| If nominal income does not increase with rise price of object you cannot buy goods and services because real income decreased |
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To get full value of one item, you must have the other item
E.X. Toothbrush and toothpaste |
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| Consumer will not buy anything above that price |
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| Consumer will not take anymore of the product even if free |
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| Land, labor, capital, entrepreneurial talent |
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| As one rises so does other |
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| As one rises, other falls |
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| If you buy one item that serves a purpose you will not by a similar item that serves the same purpose. Therefore, if price of one goes up (meat), you are more likely to buy substitute (chicken) |
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Definition
| If price of compliment goes up, sale of other product goes down. |
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| Both consumers and producers happy, transactions happen |
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| Intersection of supply and demand. Most efficient point. |
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| Extra supply, happens above the equilibrium, prices go down. |
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| low supply, causing high demand, prices go up |
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| What causes a movement along demand line? |
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| Increase or decrease in quantity demanded/ price |
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| Income, number of buyers, expectations of higher prices, taste and preferences, and price of substitutes and compliments |
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| Costs, number of sellers, Technology, Expectations, government regulations |
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| Market adjusts to deal with bad prices and surplus. |
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| Amount of money willing to pay but did not have to |
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| Amount of money the producer receives over and above what they needed to make. |
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