Football NFL-we can care about what we want and the system will work.
Wealth of Nations
Demand & Supply Changers
Relationship between Price & Quantity Supplied
2 for 1's A change in the quantity demanded of a product that results from the change in real income (purchasing power) caused by a change in the product's price.
Changes of Demand
Taste and Prefences want--> don't want <-- # of Buys more--> less <-- Income Buyers expectations of Price Related Goods (Price) Substitute/Compliments
Demand Side Market Failures
When People are not willing to pay for all services....
Story of Nicest Shirt ever, the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
Consumer Surplus & Producers Surplus
On a graph Consumer surplus is at the top & producer surplus is on the bottom.
The difference between the lowest price a producer will accept and the actual price. Also called economic rent.
Private & Public Goods
Public goods: goods that are nonrival in consumptin and/ or their benefits are nonexludable Private: rival in consumption (if i eat a hamburger, you can't eat it too) and their benefits are excludable
Apples and Oranges.
Utility Maximization Rule
Money income should be allocated such that MU per dollar spent on each unit of the goods be the same: MUa/Pa= MUb/Pb=MUc/Pc
Utility Maximization Rule Formula
Focusing on one item
It is worth more because you owned it, selling a house that you raised your kids in.
Long Run Adjustment
Changes to plant Size, in the long run there is always an equilibrium,
Don't Change Output
Changes Output, wages, people and utilities
Decreasing Cost Industry
a market structure with many competitors selling virtually identical products. Barriers to entry are quite low.
Characteristics of Pure Competition
Extremely Efficient, Using the invisible hand, maximum consumer & producer surplus.
Price=Marginal Cost=Total Cost
Pure Competition-Long Run
Profit Maximization Assumptions: Entry & Exit Only Identical Cost Constant Cost Industry
Process when new products replace old ones
Pure Monopoly Characteristic
Single Seller, No close substitutes, Price Maker-only with a downward slope, blocked entry, non-price competition, barriers of entry, not always the highest price, low efficiencies
Barries to Entry
Economies of Scale, legal barriers (patents, and licenses), ownership of essential resources, pricing and strategic carries (Rockafella, illegal)
A monopoly that arises because a single firm can supply a good or service to an entire market at a smaller cost than could two or more firms
Marginal Revenue=Marginal Costs
Nepotism, paying family more, but they do less
Realize monopolistic power, market segmentation -charging each what they are willing -charging different prices of different units -charging different price to different people (textbooks, health care, airlines) What makes most companies thrive!!
Monopost & Highest Price
iPhone, iPod, everything Apple.
Price Discrimination Legal?
Competitive Market, Mono on Brand (iPad)
Monopolist Competition Characteristics
Relavitely large # of sellers, differentiated products, some control over price, easy entry & exit, advertising