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14 Cards in this Set
- Front
- Back
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Economics
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Human behavior, flow of capital, no coordination but there is still order, production, distribution, consumption.
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Theories
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They contain refutable propositions--In economics they cannot be proven.
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Scarcity and limited
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If it is scarce it is limited and there is a demand for it.
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The theory of consumer behavior
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1. Constraints/opportunities
and 2. Tastes/preferences influences our descisions to purchase various quantities of goods |
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Demand
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Explains reularity of behavior among people who buy goods and services.
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A Demand Curve shows...
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The quantities of a good the consumers are willing to buy at different prices. Negative slope. price vs. quantity
As the price of a good increases, the quantity purchased decreases |
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Supply
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Explains the regularity of behavior among people who produce goods and services
Supply descisions are driven by cost of production. As the price of a good rises, the quantity suppliers are wiling to produce goes up. positive slope |
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Four postulates
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1. People have prefences
2. More is preferred to less 3. People are generally willing to substitute one good for another. 4. Marginal value falls as the quantity consumed increases |
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Postulate 1
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People have prefences
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Postulate 2
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More is preferred to less
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Postulate 3
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3. People are generally willing to substitute one good for another.
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Postulate 4
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4. Marginal value falls as the quantity consumed increases/variety is the spice of life.
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Total Value
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a good X is the amount a person would be willing to give up of other goods to have all of the good X
Sum of Marginal Values |
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Consumer Surplus
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=Total value - total expenditures
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