Chapter4

Chapter4 - 9/4/2007 ECONOMICS 101 CHAPTER 4 I) Search for...

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9/4/2007 E CONOMICS 101 C HAPTER 4 I) Search for Equilibrium markets can be relatively erratic **changes in demand/supply refer to shifts of the curve, while changes in the quantity demanded/supplied refer to movements along the curve** Changes in Supply - expanding supplies push down prices and increase the quantities sold Changes in Demand - expanding demand exerts upward pressure on both prices and quantities Shifts in Supply and Demand - when both demand and supply grow, quantity increases but price changes are unknowable without more information - if demand rises while supply falls, the price changes, but we cannot predict quantity changes without more information - if demand falls while supply rises, the price falls, but we cannot predict quantity changes without more information I I) Transaction Costs definition: the costs associated with gathering information about prices and availability, and mobility (transporting goods, resources, or potential buyers between markets) create opportunity cost wedges between various market prices for a good Intermediaries - specialize in reducing uncertainty and cutting the transaction costs of conveying goods from original producers to the final users, often transforming the good to make it more compatible with ultimate users’ demands
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9/4/2007 - ex: retail stores and wholesalers, people who trundled bottled water to L.A.
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Chapter4 - 9/4/2007 ECONOMICS 101 CHAPTER 4 I) Search for...

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