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== Week 43 - Markets, scarcity and decisions == * In '''[[w:market]]s''' ( [[w:fi:Markkinat (taloustiede)]] ) '''[[w:demand]]''' and '''[[w:supply (economics)|supply]]''' control the prices and goods that are produced. This is the model of '''[[w:Supply and demand]]''' ( [[w:fi:Kysyntä ja tarjonta]] ) . * '''[[w:Scarcity]]''' ( [[w:fi:Niukkuus]] ) of resources affects production decisions. * All production decisions have an '''[[w:opportunity cost]]''' ( [[w:fi:Vaihtoehtoiskustannus]] ). *'''[[w:Market equilibrium]]''' ( [[w:fi:Taloudellinen tasapaino]] ) refers to a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers. ( Wikipedia ) Market equilibrium is where the [[w:demand curve]] and the supply curve intersect. ::: The '''[[w:demand curve]]''' is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. ( Wikipedia ). * The '''[[w:law of demand]]''' is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher ('''[[w:ceteris paribus]]'''). ( Wikipedia ) ::* '''[[w:Substitution effect]]''' and '''[[w:income effect]]''' explain the law of demand * '''[[w:Normal good]]s''' are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive [[w:income elasticity of demand]]. ( Wikipedia ) vs. an '''[[w:inferior good]]''' is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. ( Wikipedia )
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