Economics as a Social Science
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20 Terms
What is economics?
It is the choices that you make and their opportunity costs.
What are the constraints?
Scarcity, time, money, resources, technological limitations
Law of Demand
as price goes up, quantity demanded goes down (vice versa)
depends on preferences assuming all other factors are held constant
What can the price of substitutes do?
Change your willingness to pay
What does it mean to have a shift in demand?
It means that there are other factors that is not price that are changing consumers want for a product.
What does it mean to have a shift in quantity demanded?
It means that price is changing how much a good is demanded while other factors are not changing.
What is the formula for the slope of demand?
P=b-mQ
Economic variables can only be found on..
the first quadrant (they can only be positive)
What are businesses called in economics?
Firms
What are firms?
Firms are producers and sellers.
Law of Supply
As the price of something increase, the quantity supplied will increase (vice versa)
Assuming if all other factors are held constant and depends only on firm technologies
What can affect supply?
Input costs, resources, taxes, labor, capital goods, technology, # of firms, expectations
What is the formula for the slope of supply?
P = c + dQ
What causes a change in quantity supplied?
A change in the price of goods.
What can a price too high cause?
It can cause a higher quantity supplied than quantity of good demanded. Results in a surplus.
What can a price too low cause?
It can cause a lower quantity supplied than quantity of good demanded. Results in a deficit.
Equilibrium price
The cross-section where supply = demand.
Why dynamic pricing?
If prices are static, the market becomes inefficient when something that affects demand or supply changes.
Markets can be considered as..
allocation mechanisms
What is a fungible token?
A type of digital assent on a blockchain that is interchangeable and holds the same value as every other unit of that token