Economics 1021A/B Lecture Notes - Lecture 3: Jet Fuel, Economic Equilibrium, Cowhide
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13 Mar 2016
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ECON 1021A/B Full Course Notes
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Market: any arrangement that enables buyers and sellers to get information and to do business with each other. Markets are unorganized collections of buyers and sellers. Competitive market: a market with many buyers and sellers and that no single seller or buyer can influence the prices. Items are only sold by producers so that the price is high enough to cover the opportunity cost: consumers seek cheaper alternatives. Money price: price (in number of dollars) that must be given up in exchange for a good. Relative price: an opportunity cost; the ratio of the good"s money price to the money price of its next best alternative good: calculate relative price: money price of a good/basket of all goods (price index) Gives the opportunity cost of the good in terms of how much of the basket In the study of demand and supply, price means relative price must be given up. Want it, can afford it, plan to buy it.
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