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Foreign exchange rates are determined in foreign exchange markets
Inferior good – a good whose demand curve shifts leftward when the incomes of buyers increase
Market – the market for any good consists of all potential buyers and sellers of that good
Market equilibrium – occurs when all buyers and sellers are satisfied with their respective quantities at the market price
Normal good – a good whose demand curve shifts rightward when the incomes of buyers increase
Substitutes – two goods are substitutes in consumptions if an increase in the price of one causes a rightward shift in the demand cure for the other
Supply curve – a curve or schedule showing the total quantity of a good that sellers want to sell at each price
? Adam Smith thought that the market price of a good was determined by its cost of production
? Although costs affect prices, they could not explain why Pablo Picasso’s sells for more than A...
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