ECON101 Chapter Notes - Chapter 3: Ceteris Paribus, Demand Curve, Relative Price

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Wokia Kumase

Document Summary

Relative price is opportunity cost: ratio of money price : opportunity cost, determined by demand and supply. Market is arrangement that enables buyers and sellers to get information and do business with each other: markets for goods, markets for services, markets for factors of production. I. e. computer programmers: markets for other manufacture inputs. I. e. memory chips and auto parts: markets for money and financial securities, physical markets, markets where people are connected by internet, phone, or fax. Most markets are unorganized collections of buyers and sellers. Markets vary in the intensity of competition that buyers and sellers face. Competitive market has many sellers and buyers: no single buyer/seller can influence price. Producers offer items for sale only if the price is high enough to cover their opportunity costs. Money price is number of dollars given up in exchange for items. Opportunity cost is the highest valued alternative forgone.