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Microeconomics
- Deals with the behavior workers, investors, owners of land, business firms.
- How economic units interact to form larger units- markets and industries
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Positivie Analysis
Analysis describing relationships of cause and effect
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Normative Analysis
Analysis examining questions of what ought to be
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Market
Collection of buyers and sellers that, through their actual or potential interactions, determine the price of a product or set of products.
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Arbitrage
Practice of buying at a low price at one location and selling at a higher price in another.
e.g. Gold
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Perfectly competitive Market
Marekt with many buyers and sellers, so that no single buyer or seller has a significant impact on price.
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Market Price
Price prevailing in a competitive market
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Extent of a Market
Boundaries of a market, both geographical and in terms of range of products produced and sold within it.
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Nominal Price
- Absolute price of a good, unadjusted for inflation.
- Current Dollar
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Real Price
- Price of a good relative to an aggregate measure of prices; Price adjusted for infaltion
- Constant Dollar
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Consumer Price Index
- Measure of the aggregate price level.
- Percentage changes in the CPI measure the rate of infaltion in the economy
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