ECON 1050 Chapter 3: Econ – Chapter 3

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A market has 2 sides: buyers and sellers. There are markets for goods, and for services. Some markets are people from different parts of the world who never meet. Competitive market: has many buyers and many sellers, so no single buyer or seller can influence the price. Items go on sale only if the price is high enough to cover their oc. Money price: amount of money that must be given in exchange for good. Relative price: the ratio of one price to the other it is an oc: to calculate: money price of a good. Money price of a basket of all goods (price index) Demand reflects a decision about which wants to satisfy. Law of demand: the higher the price of a good, the smaller is the qd. The lower the price of a good, the greater is the qd. Demand refers to the entire relationship b/w the price of a good and the qd.

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