A substitute good is a similar product of lesser value, but can fulfill the wants/needs of the consumer.
e.g. A used $6000 car is a substitute to a $20000 new car so long as the want of the consumer is only transportation.
When something becomes more expensive people lack the will to buy it and as it become less expensive more are willing to buy it assuming they have other choices and the rest of the market stays the same.
e.g. When the price of gas increases people begin to take into account the cost of the trip and become less inclined to travel due to the cost. When the price of gas decreases people are more likely to be outgoing without question to the price.
Equilibrium is when the production of goods is the …show more content…
from 1930 to 1970 the price of gasoline remained around .50 to .70 cents and was mostly in a state of equilibrium until an oil embargo was placed on Iran in the 1980 and prices began to fluctuate upwards.
Microeconomics looks directly at the individual or company in their decision making relative to the economy. Whereas Macro economics looks at the entire economy and what choices everyone makes as a …show more content…
people usually have two decisions rent or buy a house. Normally most people would think buying would put them in a better position in the long run whereas rent would result in no return on investment. Therefor many people prior to 2008 bought houses with the intent of paying it off and having more assets in the long run. But obviously the economy collapsed and what they invested in resulted in a loss putting them in a worse off place. Had they rented and equivalent place they might have had more leeway in staving off their loss and maintaining their quality of life.
Based off the rationality assumption people are always trying to make their lives better.
e.g. going to college to get a better job and wage.
Normative economics regards someones choices and determines what should be done with the economy. e.g. If people are buying less of something and the governmentsees it as a vital part of the economy they may introduce subsidies.
Land, All the resources available for human use, ores, water, fuels, fertility.
Labor.
Physical Capital, the sum of all equipment used in producing goods like machinery, construction equipment, factories.
Human capital.
e.g. A used $6000 car is a substitute to a $20000 new car so long as the want of the consumer is only transportation.
When something becomes more expensive people lack the will to buy it and as it become less expensive more are willing to buy it assuming they have other choices and the rest of the market stays the same.
e.g. When the price of gas increases people begin to take into account the cost of the trip and become less inclined to travel due to the cost. When the price of gas decreases people are more likely to be outgoing without question to the price.
Equilibrium is when the production of goods is the …show more content…
from 1930 to 1970 the price of gasoline remained around .50 to .70 cents and was mostly in a state of equilibrium until an oil embargo was placed on Iran in the 1980 and prices began to fluctuate upwards.
Microeconomics looks directly at the individual or company in their decision making relative to the economy. Whereas Macro economics looks at the entire economy and what choices everyone makes as a …show more content…
people usually have two decisions rent or buy a house. Normally most people would think buying would put them in a better position in the long run whereas rent would result in no return on investment. Therefor many people prior to 2008 bought houses with the intent of paying it off and having more assets in the long run. But obviously the economy collapsed and what they invested in resulted in a loss putting them in a worse off place. Had they rented and equivalent place they might have had more leeway in staving off their loss and maintaining their quality of life.
Based off the rationality assumption people are always trying to make their lives better.
e.g. going to college to get a better job and wage.
Normative economics regards someones choices and determines what should be done with the economy. e.g. If people are buying less of something and the governmentsees it as a vital part of the economy they may introduce subsidies.
Land, All the resources available for human use, ores, water, fuels, fertility.
Labor.
Physical Capital, the sum of all equipment used in producing goods like machinery, construction equipment, factories.
Human capital.