Supply and Demand
Microeconomic -
building blocks that create big economy
Opportunity cost
Implicit versus explicit(accounting) costs
economic cost versus accounting cost
Sunk cost/benefits - Anything that is common to whatever choices you have can be filtered out of the analysis.
The Determinants of Demand
Law of Demand - When you lower the price of any good or activity, consumers will demand more of that good or activity.
No just price alone. It's important to understand how Price versus non-price factors affect quantity demanded.Price induces just a movement along a given demand curve.Any other factor changes, it'll shift the entire price quantity relationship. For any constant price, quantity demanded will differ if income is changed or substitutes, prices of substitutes or compliments are changed or government taxes and subsidies have been instituted.
Substitutes(lexus, bmw), complement (car,oil) affect the price of the item. some items are substitutes or complement.
The Determinants of Supply
The law of supply - The higher the price the greater the quantity supplied
Technology, input prices, government taxes/susidies
Market Equilibrium
The point where the demand curve and supply curve intersect.
Lecture slides(PDF)
Definition: The
nominal value of a good is its value in terms of money. The
real value is its value in terms of some other good, service, or bundle of goods.
Examples:
- Nominal: That CD costs $18. Japan's science and technology spending is about 3 trillion yen per year.
- Real: A year of college costs about the value of a Toyota
Camry. Those tickets to see Van Halen cost me three weeks' worth of
food!
Relative price is another term for the real price of a good or
service. When we say that the relative price of computers has fallen in
recent years, we mean that the price of computers relative to or measured in terms of other goods and services—such
as TVs or cars—has declined. Relative prices of individual goods and
services can decrease even if nominal prices are all increasing, because
of inflation.