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14 May, 19:56

Example of

- Income Effect

- Normal Goods vs. Inferior Goods

- Complements

- Substitutes

- Fixed costs

- Variable costs

- Consumer Surplus

- Bartering

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  1. 14 May, 21:53
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    - Income Effect

    A change in consumption due to a change in income.

    Example: When you buy cheaper breads after you get a salary cut.

    - Normal Goods vs. Inferior Goods

    Normal goods : The demand of this product will increase when people's income increase

    Inferior Goods: Demand of this product will decrease when people's income increase.

    Example: Luxury clothes and less-known brand clothes.

    - Complements

    A product that is used alongside of other products. Cannot really stand alone.

    example: Smartphone case is a complement product of your smartphone. No-one really by the case without having the phone.

    - Substitutes

    A product that is used in exchange of another product.

    Example : When you drink tea after you run out of coffee.

    - Fixed costs

    A cost that remain the same regardless of how much goods or services you produce.

    Example: Bulding rent.

    - Variable costs

    A cost that will increase when you increase the production of your goods or services.

    Example: Cost of materials.

    - Consumer Surplus

    A difference betweenthe price that people willing to pay compared to the actual price that they pay.

    Example: If you have a $500 budget for a laptop and you managed to purchase it for $400, you have a $100 customer surplus.

    - Bartering

    when you exchange one product with another without using any monetary instrument.

    Example: When you exchange your Jacket with your friend's pants.
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