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Summary Economy period 3
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Economics period three HBO international business
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Samenvatting Economics - Principles of Economics (1000PEC_22)
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summary of all macro economics chapters
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Volledige samenvatting van de benodigde stof voor het 1ejaars AMSIB Principles of Economics eindtentamen
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Economy period 3 week 1 ch. 1Market; any arrangement that enables buyers and sellers to get information and to do
business with each other.
Competitive market; market with many buyers and many sellers.
Money price; the numbers of dollars that must be paid for a certain object.
Relative price; the ratio from one price to another.
Opportunity cost; the relative price is an opportunity cost – meaning that in comparison of
one product with the other product, you can get something extra or have to give something
up.
Quantity demanded; is the amount a consumer plans to buy during a certain amount of
time for a certain price.
Note that the quantity demanded is not always the same as actually bought.
Law of demand; the higher the price, the smaller quantity is demanded, and the lower the
price, the higher the quantity is demanded.
This happens for two reasons;
1. Substitution effect; the relative price increases when the normal price of a product
increases. besides that every product is unique, it does have substitutions. For
example, buy a ford instead of a Mercedes.
2. Income effect; when a price rises but the income stays the same, so does the relative
price increases. People cannot afford the product anymore.
Demand; the entire relationship between the price of the product and the quantity
demanded of that good. Demand is illustrated by the demand curve and demand schedule.
Change in demand; means the demand in the graph will change too. Depending on the
increasing or decreasing demand the line will move left – or – rightwards.
Six main factors bring changes in demands;
1. The price of related goods
2. Expected future price
3. Income
4. Expected future income and credit
5. Population
6. Preferences (people are getting more aware of their health, that’s why more energy
bars are sold for example).
The law of supply; the higher the price of a good, the greater is the quantity supplied. Why
does it work like that – the price received must always cover the marginal costs. When
buyers need to spend more money for the same product, it is just pure logic the supplier
feels the need to produce more since he can cover it anyways.
Supply curve; used in combination with the demand curve and works the same.
Minimum supply price; the price which has the same amount as the marginal cost. This is
what it costs to produce this product. This is also where the supply price starts.
Six factors are the reason for changing in supplies;
1. The prices of factors of production (price of factor rises, so does price product)
2. The prices of related goods produced.
3. Expected future prices
4. The number of suppliers
, 5. Technology
6. The state of nature
Equilibrium price; the price by which the demanded quantity equals the quantity supplied.
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