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ECON 1000 Cha. 3 Notes.docx

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Department
Economics
Course
ECON 1000
Professor
Sadia Mariam Malik
Semester
Fall

Description
Econ Cha. 3 Jot Notes Market and Prices - There are market for:  Goods – apples, hiking boots  Services – haircuts, tennis lessons  Factors of production – computer programmers, earthmovers  Inputs – memory chips, auto parts  Money – Yahoo! Stock - Markets can be:  Physical – live car auctions, produce markets  Electronic (Through the internet) – e-commerce, currency markets  Unorganized collection of buyers and sellers – buyers for basketball shoes vs sellers for them - Competitive market – a market with many buyers and sellers, no single person can influence the price - Money price – the number of dollars that must be given up in exchange for the item - Relative price – the ratio of one price to another (ex. $1 coffee vs $0.5 gum) - Relative price is an opportunity cost - Price index – the money price of all goods Demand - Demand reflects a decision about which wants to satisfy - Quantity demanded – the amount that consumers plan to buy during a given time period at a particular price - Quantity demanded does not = quantity actually bought - Measured as an amount per unit of time - Why does higher price reduce quantity demanded?  Substitution effect  Income effect Demand Curve and Demand Schedule - A demand curve shows the relationship between the quantity demanded of a good and its price when everything else stays the stay - Willingness and ability to pay is a measure of marginal benefit - 6 main factors in changes in demand:  Price of related goods  Expected future prices  Income  Expected future income and credit (expected future income
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