ECON 101 Lecture Notes - Lecture 12: Transaction Cost, Real Estate Broker
Document Summary
Exchange refers to the mechanism by which "stuff" (money, products, services, etc) are given up for something else. Trade words apply to how much of one thing is forgiven for how much of another. For instance, if is traded for a bestselling book, the terms of trade for are. If a loaf of bread"s price is so the terms of exchange are 1 loaf of bread for. Buyers and sellers will also find more favorable trade rates. Buyers prefer lower prices, whereas sellers prefer higher prices. Economists find both advantages and costs, as always. They want to know what costs a trade entails, and whether the costs will prevent a trade from occurring. Say smith wants to buy an excellent condition red 1965 ford mustang. The highest price she wants and will pay for the mustang is ,000. Also believe jones is in excellent shape to own a red 1965 ford mustang.
