Microeconomics chapter 1-5

society is getting the maximum benefits from its scarce resources

benefits are distributed uniformly among society's members

what you give up to get that item

people systematically and purposefully do the best they can to achieve their objectives, given the available opportunities

small incremental adjustments to an existing plan of action

show the flow of the factors of production, simplification of reality

land labor and capital

descriptive, how the world is

how the world should be

change in price

change in anything else, not price

who makes more

opportunity costs of two producers

a market in which there are so many buyers and so many sellers that each has a negligible impact because other sellers are offering similar products

other things equal, when the price of a good rises the quantity demanded of the good falls and when the price falls the quantity demanded rises

when income goes up you buy more (brand name goods)

when income goes up you buy less (ramen noodles)

doesn't matter one or the other

the demand of hot dogs goes up the demand for ketchup goes up

other things equal, when the price of a good rises the quantity supplied of the good also rises and when the price falls the quantity supplied falls as well

the price of any good adjusts to bring the quantity supplied and quantity demanded for that good into balance

at that price, supply is higher than demanded

amount demanded is less than supplied

Decide whether the event shifts the supply curve, the demand curve, or in some cases, both curves. then we decide whether the curve shifts to the right or to the left. then we use the supply and demand diagram to compare the initial and the new equilibrium which shows how the shift affects the equilibrium price and quantity.

measures how much the quantity demanded responds to a change in price