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Economic concept relating to value
State of affairs in which a person is doing something at least cost
Depends on what a person subjectively values
Minizmizing Cost and Maximizing Profit |
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| Do the activity in which you are most efficient ( opporutnity costs are minimized) |
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| Production Possibiliities Frontier |
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Given a fixed set of resiources, what is the most output you can produce with your inputs
If you devote all your production
Gomer vs. Goober- Corn vs. Strawberries |
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| We have a plentiful supply of water, so diamonds are more scare than water, so we are willing to pay a higher price for diamonds |
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| The more scarce something is, the higher value we place on it so the price is higher |
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| A particular point on the demand curve |
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Private property rights, free exchange, the rule of law
Get social cooperation when the rules of the game are right |
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1. Price of Related Good
2. Income of consumers
3. Expectations on future price
4. Taxes |
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| The price and quantity demanded of a good are inversly related |
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| Effect the demand curve- will make the line shift |
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| Changes in Quantity Demanded |
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| Changes specific point on demand curve |
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| Price- elasticty of demand |
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Definition
| The percentege change in quanity demanded per percent change in price |
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