Trade offs

Positive -> facts

Normative -> opinion

absolute - individual price
Price of Apples was 50k

aggregate - total price
Price of Total Shopping - 1 million sums

To find REAL PRICE

CPI(base year's) / CPI (searching year) * Nominal price (of searching year)

We are done with TOPIC 1 lecture + seminar analysis!

For SUPPLIERS: when price get higher = supply(production) increases

Affects to supply:
1. Price changes
2. Cost of production

For DEMANDERS:

Affects:
1. When price decreases = demand increases (highlighted curve)
2. When income is increasing = demand is shifting (punktir)

When price increased from 100 to 110 = Demand decreased, Supply increased => Surplus

When price decreased from 100 to 90 = demand increased, supply was not enough = shortage

so we need EQUALIBRIUM

Perfectly elastic => when price changes even for 1% the demand becomes 0. When price decreases even slightly = demand increases rapidly = shortage.

1st example