Summary of chapters: Labor cost, supply and demand, and utility.

Throughout reading the first four chapters, I realized that every single roll (component) and system has to be balanced in order to form the market, the economy. So to create a market, something has to be produced to sell, and somebody has to purchase what has produced. Before producing a product, one must resolve three critical questions about the use of its scarce resources: What, how, and for whom to produce. Then to produce a …

…the satisfaction we get from consumer goods and services. Total utility refers to the amount of satisfaction associated with all consumption of a product. Marginal utility refers to the satisfaction obtained from the last unit of a product. If demand is elastic, a price increase will reduce total revenue. Price and total revenue move in the same direction only if demand is inelastic. Advertising seeks to change consumer tastes and thus the willingness to buy.