ex: insulin to a diabetic: is there a substitute for insulin?
Not exactly, but one could have a better diet, better exercise, prayer; not perfect but helps
Recall: demand curve, want and have the ability to get it
Consider: lower price, stock up (think will have in the future, maybe pay $60 for life supply)
ex: penicillin, not very big in 1880, but if someone really wanted it, could dedicate all resources to finding it
ex: claim "people will pay anything for healthcare", markets can't do it, costs don't matter
IF TRUE, does anything change in distribution? public health care = split check
Fact: 90% of US medical care paid for by others (gov't, insurance)
Why is this person wrong about health care?
Of COURSE cost is an issue; yes do whatever can to live
BUT also would eat healthy, avoid drinking, smoking, wouldn't get pregnant
--> we do not commit to life at alllll costs
-At some point, there is a substitute for everything!
Income Elasticity of Demand
Quantity demand: > 0 "normal"
Income: < 0 "inferior"
-how much consumption/income changes
-income consumption is NOT the same as price consumption
Income elastic of enviro = 2
-income up some amount, desire to spend $ on enviro goes up even more
ex: Income $50,000. spend on enviro $500 Income elasticity = 2
-Income increased by 20%
-spending on environment goes up by 40%
Change in I= $10,000
Change in E= $200, bigger share of income
Cross Price Elasticity
-complements/substitutes
Cross price is positive: goods are substitutes
(negative means goods complement)
Law of Supply
ex:Britain bought slaves to free them;
Problem was, the incr. # of slaves taken in caused the supply of slaves to incr.
ex: Chinese bought swords from Japan to deplete their supply, but Japan ended up producing more
-Prices go up and people want
-->respond by making more
Consider: riding the bus is cheap, for rich and poor people; other opportunity costs matter, relativity
Consider: price of grad school is very high, but people go during a recession b/c there are no goods jobs currently available
What are costs?
Consume resources, tradeoffs
Must be related to an action and to whom, not a thing;
-Must entail sacrificed opportunities
What is the cost of rugby? Ridiculous!
A cost could be attributed to how to play, to teach, equipment
-yes, for example pay Rizzo the worth of 3 projectors
-Costs of hitting making eating a basebell
-Costs must be costs to someone
Why cost more to make a mountain bike than a picnic table?
Price of stuff going into mountain bike higher value
-Also, consider other opportunity costs missed, metal of bike could be used elsewhere
-->others bid away resources
-cheap means fewer opportunities
ex: women in India hand cut the grass, can she obtain value from somewhere else?
Rizzo paid more than football coach
--> Rizzo could have many other employment opportunities; to keep him pay more for his salary
Skilled workers paid more than unskilled workers IF their skills could be used elsewhere
"talented"-sing and balance on one foot while work, paid more? DEPENDS
skills matter if they are valued somewhere by someone else
Quantity Supply: amount of goods that firms are willing/able to produce at a particular prices (a number)
Law of Supply: when price of good rises, sellers will make more
(a "most of the time" law)
Income: < 0 "inferior"
-how much consumption/income changes
-income consumption is NOT the same as price consumption
Income elastic of enviro = 2
-income up some amount, desire to spend $ on enviro goes up even more
ex: Income $50,000. spend on enviro $500 Income elasticity = 2
-Income increased by 20%
-spending on environment goes up by 40%
Change in I= $10,000
Change in E= $200, bigger share of income
Cross Price Elasticity
-complements/substitutes
Cross price is positive: goods are substitutes
(negative means goods complement)
Law of Supply
ex:Britain bought slaves to free them;
Problem was, the incr. # of slaves taken in caused the supply of slaves to incr.
ex: Chinese bought swords from Japan to deplete their supply, but Japan ended up producing more
-Prices go up and people want
-->respond by making more
Consider: riding the bus is cheap, for rich and poor people; other opportunity costs matter, relativity
Consider: price of grad school is very high, but people go during a recession b/c there are no goods jobs currently available
What are costs?
Consume resources, tradeoffs
Must be related to an action and to whom, not a thing;
-Must entail sacrificed opportunities
What is the cost of rugby? Ridiculous!
A cost could be attributed to how to play, to teach, equipment
-yes, for example pay Rizzo the worth of 3 projectors
-Costs of hitting making eating a basebell
-Costs must be costs to someone
Why cost more to make a mountain bike than a picnic table?
Price of stuff going into mountain bike higher value
-Also, consider other opportunity costs missed, metal of bike could be used elsewhere
-->others bid away resources
-cheap means fewer opportunities
ex: women in India hand cut the grass, can she obtain value from somewhere else?
Rizzo paid more than football coach
--> Rizzo could have many other employment opportunities; to keep him pay more for his salary
Skilled workers paid more than unskilled workers IF their skills could be used elsewhere
"talented"-sing and balance on one foot while work, paid more? DEPENDS
skills matter if they are valued somewhere by someone else
Quantity Supply: amount of goods that firms are willing/able to produce at a particular prices (a number)
Law of Supply: when price of good rises, sellers will make more
(a "most of the time" law)
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