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CHAPTER ONE- FUNDAMENTALS OF MICROECONOMICS - Coggle Diagram
CHAPTER ONE- FUNDAMENTALS OF MICROECONOMICS
Microeconomics- deals with the behavior of individual economic units
Macroeconomics- deals with aggregate economic quantities
level +growth rate if national output, interest rates, unemployement, inflation
all actors of microeconomics, i.e. individuals, workers, companies, prices etc... face
trade-offs
trade offs based on prices
Postive vs Normative Analysis
positive- deal with explanation and prediction
uses scientific principles to arrive at a conclusion
normative- what ought to be
often supplemented by value judgments
uses factual evidence to support
Market
buyers and sellers that determine prices through their interactions
Perfectly Competitive
many buyers and sellers - no single buyer/seller has significant impact on price
Market Price
price prevailing in a competitive market
non perfectly competitve market- different prices for the same product
Extent of a market
/
Market Definition
boundaries of a market- geographic + range of products
important- understand who actual/ potential competitors + public policy decisions
Prices
Real
price of the good relative to an aggregate measure of prices- prices adjusted for inflation
Nominal
absolute price of a good, unadjusted for inflation
Consumer Price Index
measure of the aggregate price level
Producer Price Index
Measure of the aggregate price level for intermediate products and wholesale goods