What is the price commonly called in the labor market?
Price in labor market is estimated by annual salary or hourly wages which is paid to a laborer.
In financial capital market is the rate of return or interest rate return of an investment
1. Watch this video: https:/www.youtube.com/watch?v=zcPRmh5AIrI
Explain the logic of the Coase Theorem. Explain under what conditions the Coase Theorem fails.
The logic of the Coase Theorem is that when negative externalities occur, the creator of the neg
1. Provide one example of a negative externality and draw a graph depicting the socially optimal quantity and the
market quantity. Explain why this is a market failure. Explain the similarities between a negative externality and a
Section 10 Practice Test
Identify the choice that best completes the statement or answers the question.
1. In the short run:
a. all inputs are fixed.
b. all inputs are variable.
c. some inputs are fixed and some inputs are variable.
Equation of Exchange
1. If GDP is $1,000 and the velocity of money is 4, what is the money
1000 / 4 = 250
Bond Prices and Interest Rates
2. What is the interest rate of a bond originally priced at $2,000 with a
fixed annual interest payment of $12
Economics is the study of scarcity and choice.
At basic level, it comes down to individual choice
The economy is a system that coordinates choices about production with choices about consumption
and distributes goods and services to the people who wants
Households give factors (labor) to factor markets who then give factors (now raw materials) to firms
who make it into goods and services to give to product markets who give g/s to households.
Money flows in the opposite direction. Households pay for g/s w
Change in demand is a shift of the demand curve changing quantity at a given price
Movment along D curve changes the good's price but along the quantity.
Reasons to shift: Change price of related g/s, income, tastes, expectations, consumers.