ECON102 Chapter Notes - Chapter 3: Economic Equilibrium, Opportunity Cost, Demand Curve

• School: University of Waterloo
• Department: Economics
• Course: ECON102
• Professor: Wokia Kumase

Document Summary

A market has two sides: buyers and sellers. A compeiive market is a market that has many buyers and many sellers, so no single buyer or seller can inluence. The money price is the number of dollars that must be given up in exchange for it. The raio of one price to another is called a relaive price, and a relaive price is an opportunity cost. The normal way of expressing a relaive price is in terms of a basket of all goods and services. We divide the money price of a good by the money price of a basket of all goods (called a price index) The resuling relaive price tells us the opportunity cost of the good in terms of how much of the basket we must give up to buy it. The quanity demanded of a good or service is the amount that consumers plan to buy during a given ime period at a paricular price.