Econ 101 1st Edition Lecture 1Supply & Demand: The BasicsThree Questions:• What?• How?• How much?3 major actors:• Householdo Live under one roof, having decisions made for themo Suppliers of most of the reproductive facts (labor, land, and capital)o How to spend money (what goods and serviceso How to sell/rent the resources that the house posses (major suppliers of labor in the economy; own the land and the capital that is used to make goods/services for the business sector. • Business Firms (atom of behavior)o what goods and serviceso how much is producedo to whom it is sold• Central Authorities (governmental agencies)Market: area in which buyers and sellers exchange the goods and services• Can exist everywhere and nowhere- Amazono Product market: final good/service (purchase buy user) consumer goodo Factor Market: labor, factor of productionEconomies: These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.Market Economy: Economy that contains many marketsCommand Economy: Markets do not make decisions about what goods are purchased and sold but a central authority makes the decision. Free Market Economy: market economy in which the bulk of the decisions are made by the actors in the market themselves. Capitalist Economy: the means of production are owned by the private sector rather than the government section- has to do with the ownership of the means of productionCircular Flow of Economy• household sell factor services buys commodes -> sells to factor markets• firms buy factor services produces -> sell commodities • Capital: produced means of production- machine that produces something◦ things that are produced in order to produce something else◦ Households- provide labor in the labor market; selling time not ownership or labor◦ Land- also owned by households, rent/sell to someone else to useOpportunity Cost: of any economic decision is the foregone value of the next best alternative that is not chosen. Combination of direct and imputed cost. • Going to collegeo lost wage incomeo time spent doing other thingo does not include future gain*o tuitiono feeso cost of foodo cost of roomo books (supplies)o insuranceo Things you don’t pay money for - imputed costo Things you pay money for- direct cost• when make a decision between labor and leisure [display as dollar