ECON 2000 Chapter : Chapter 3 Notes

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azuremammoth471

15 Mar 2019

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If something is less expensive, we buy more, and if something is more expensive, we buy less: the law of demand: the price of a good and the quantity demanded are inversely related, all things equal. These are not the same: demand and quantity demand are different. Tabasco; another example is toothpaste centered around functionality difference commoditized commodities: the more specific we get, the more substitutes we find, you buy these inferior things because you have to. January, it becomes : people react to fear of price increase. 1,000,000 people are going to consume a lot more hamburgers. January; people buy less now different quantities: at different prices, during a specific time period, this does not mean that a seller who makes only one good must offer it at different prices. Okay, i"m going to make 10 more houses than i originally planned . If you"re a consumer, the first unit offers more satisfaction than the 8th unit of.

Related Questions

1. In recent years China market reforms have turned toward:

	A.	more free trade, allowing foreign-owned enterprises to import, export, and establish production in China.
	B.	establishing more urban collectives.
	C.	transforming state-owned enterprises into shareholder-owned corporations.
	D.	reestablishing central planning.

2. In pure capitalism, the role of government is best described as:

	A.	nonexistent
	B.	limited
	C.	significant
	D.	extensive

3. In pre-reform Russia and pre-reform China:

	A.	both consumer and capital goods outputs were determined by central planning.
	B.	both consumer and capital goods outputs were determined by the market.
	C.	capital goods output was determined by planning, but consumer goods output was determined by the market.
	D.	consumer goods output was determined by planning, but capital goods output was determined by the market.

4. In college, you practically existed on Spam, but now that you have an $80,000 a year job, you never want to see Spam again. We can safely conclude that you consider Spam to be

	A.	a normal good.
	B.	a complementary good.
	C.	an inferior good.
	D.	a luxury good.

5. In a free market, the price system determines how society's output will be distributed by:

	A.	ensuring that low-income people can buy all of the necessities for living.
	B.	providing goods for those willing and able to pay the equilibrium price.
	C.	ensuring that each commodity is produced by the most efficient technique.
	D.	allowing all those who desire a commodity to buy it.

taupesnail247

On Amazon.com, there are three versions of Keynes' famous General Theory: a hardcover for $19.79, a paperback for $8.82, & a Kindle version for $2.99. There is not much difference in the cost of production between hardcover & paperback books (there likely is for the Kindle e-book version), but hardcover books do tend to be published earlier than paperback versions of the same book.

How do you explain the wide variety of prices for basically the same book?

A. Even though the cost of production between hardcover and paperback is small, demand is highly elastic, so this small cost difference results in a large price difference. The cost difference between paperback and e-books is larger, resulting in the smaller gap between paperback and e-book prices.

B. The market for hardcover books has more demand and less supply than the market for paperbacks, which likewise has more demand and less supply than the market for e-books. The equilibrium prices all reflect these differences.

C. Price discrimination between demanders. High demanders are willing to pay a high price for a hardcover that is published early. Low demanders aren't, and are only willing to pay a low price for the later paperback. It is much cheaper to produce the Kindle version (MC probably close to zero), and not many buyers (people with Kindles, less D) lead to the lowest price.

D. Price discrimination between demanders. Kindle owners are high demanders since the format is not compatible with anything but Kindles. Hardcover buyers are low demanders since there aren't many who would want a hardcover when paperbacks or e-books are cheaper. There are more paperback buyers, so they pay a price between these two extremes.

champagnemule886

Economics is nothing more than the study of scarcity and choice. It's called the Economizing Problem.

Economics is also the study of human action---why people make the choices they do.

We have finite (limited) resources and infinite (unlimited) demand for goods and services. We must, therefore, use rational decisions as to how to allocate these resources so that we can produce the goods and services that satisfy as many needs and wants as possible.

Needs are those things that make life possible---food, clothing, shelter, etc. Wants are the things that make life easier---glass in windows, carpet on the floor, a refrigerator to keep your beer cold, etc.

The resources we are trying to use wisely are not confined to money. We are talking about talent, ability, drive, ambition, etc. We can't all be brain surgeons. Nor would most of us want to be. We have different needs and wants that drive our ambitions. I have 5 grandchildren. The oldest two are twins---a boy and a girl. My granddaughter graduated from Idaho University with a bachelor's and a master's degree in accounting in 5 years. She passed the CPA exam on the first try. She now lives in Panama and works for BMW. She speaks, reads, and writes 4 languages, including English. Her brother finally graduated from the University of Arkansas in May 2016 after 8 years! Why did it happen this way?? They were raised the same way by the same parents. Why was my granddaughter drove to succeed and my grandson so listless?

Then there is subjective valuation and opportunity cost. Opportunity cost is nothing more than what you have to give up to do something else. Some of you might have to roll out of the bar or the party a little before you wanted to leave just to be able to attend my class. You might also have to give up some precious sleep. In any event, you had to give up something to attend my class. That's the opportunity cost. Remember, everything you do has a price (opportunity cost) that must be paid according to Harry Browne who wrote, How I Found Freedom in an Unfree World.) To do one thing you must give up the opportunity to do something else.

When people decide to buy a product or service they must decide if it will satisfy a need or want at a price they are willing to pay. The number one reason that people buy the products or services they do is called Personal Tastes or Preferences (Subjective valuation). Everyone has a different price they are willing to pay for the same product or service. Something is only worth what someone is willing to pay for it. That's a subjective valuation. Each of us has a different intensity of demand for the same products. Things you want I may not care for at all, and the opposite may also be true. This is why there is such a variety of goods and services offered on the market.

Subjective valuation is also fluid. As your income goes either up or down it changes your valuation of products and services. Have you ever wanted something so bad you would do almost anything to get it---an i phone or I pad?---but once you get the money you think, "do I really want this?' and you don't buy it. This is common. If it were not for a subjective valuation we would all be wearing the same style and color clothes and living in similar houses, etc. Wouldn't that be a wonderful world! I'd find the tallest building in downtown Orlando and see if I could fly! It is not the similarity in people that interests me. It's the differences. It's my desire not to be like everyone else that has driven my life. Don't strive to be someone else. Strive to find and be yourself. God save me from a terminal case of conventional wisdom!

There are 5 embedded questions.

Give me an example of subjective valuation.

salmoneel837

ECON 2000 Chapter : Chapter 3 Notes

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