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Theory exists to explain the variables
Givens, not a result in the theory
The best alternative taht we forgo, or give up, when we make a choice or a decision.
An apporoch that attempts to understand behavior and the oporation of systems withour making judegments. decscribes what exists and how it works.
An approach to economics that anylyes outcomes of economic behavior, evaluates them as good or bad and may perscirbe courses of action. AKA policy economics.
Detrerminants of demand
- Change in income
- Change in Tastes
- Change in prices of related goods
- Change in buyers
- Expected future change in price
Income goes up, Demand goes up
Income goes up, demand goes down
Price of one substitute increase then the demand for the other substitute increases.
Price of one complement increases then the demand for the other complement decrease
Determinants of Supply
- Input price
- Change in number of sellers
Law of Supply
An increase in market price will lead to an increase in quantity supplied and visa versa.
Law of demand
As prices rise, quantity demanded decreases and visa versa.