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SECOND RULE OF SUBJECTIVITY: The second of seven basic rules of the economy. It is the notion that market prices are ultimately determined by subjective values and preferences of buyers and resource owners. While regular, everyday consumers are prone to accept the prices "set" by retail stores and other sellers as etched in stone (perhaps along with the Biblical ten commandments), such is not the case. The price of a product depends on two things, demand (especially the demand price that buyers are willing to pay) and supply (especially the supply price that sellers are willing to accept). Both, I repeat both, are subjectively determined. By subjective, I mean they are based on the values, beliefs, tastes, and preferences of people.
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Lesson 22: Factor Supply | Unit 3: Factor Supply
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Page: 14 of 25
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Topic:
Market Control Times Four
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- Remember the four market structures with varying degrees of control over the supply-side of the market.
- HOWEVER, the demand side is also subject to varying degrees of control.
- The terminology for these very similar to that for supply-side control.
- Monopsony
- Oligopsony
- Monopsonistic Competition
- Perfect Competition
- Market control on the buying side of factors markets need not be related to the degree of market control on the selling side of product markets.
- However, it's not unusual to find comparable market control in both output and input markets.
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DEMAND DEPOSITS Standard checking accounts maintained by commercial banks. They pay no interest on balances and as the name indicates, the funds can be withdrawn "on demand," which is accomplished by writing a check. Demand deposits on the only type of checkable deposits that can be legally offered to businesses. Demand deposits are one type of checkable deposits. Others are NOW accounts, share drafts, and ATS accounts.
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Three-forths of the gold mined each year is used to manufacture jewelry.
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"Success is more a function of consistent common sense than it is of genius. " -- An Wang, industrialist
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CIF
Cost, Insurance, Freight
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