Market system mechanism by which a capitalist society decides how to allocate its resources It s what actually finds the spot on the PPC for each good produced Y Microeconomics A X B Positively directly related variables When X goes up Y goes up and vice versa Represented by an upward sloping line A Negatively indirectly inversely When X goes up Y goes down or vice versa Represented by a downward sloping line B Number of units a firm would be willing to sell S f price costs of production tech of competitors The relationship between the price a firm is able to charge and the number of resources required for production is positive The line that represents this positive relationship is supply Quantity supply is based on price Demand Must be willing able to purchase something D f price taste preferences disposable income price expectations prices of related goods Related goods are either substitutes why buy a slice of pizza when you can get a hamburger for less or complements if soda is too expensive you won t buy pizza Price Supply Demand Quantity sold demanded The only price and quantity that exists is where a trade has taken place
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