I should have done my blog sooner.
Wednesday, January 21, 2015
Unit One: Last post! Buiness cycles!
(1/20/15)
Expansionary: Real output in the economy is increasing and the unemplyment rate is declining. (growth) EX: construction.
Peak: Real output is at its highest point.
Contractionary (Recession): real output in economy is decreasing and the unemployment rate is rising.
Trough: This is where you reach tour lowest point of GDP.
*One cycle is from T to T. (T = trough)
*Recession lasts about 14 months.
*The bulk of the cycle is the growth stage
Expansionary: Real output in the economy is increasing and the unemplyment rate is declining. (growth) EX: construction.
Peak: Real output is at its highest point.
Contractionary (Recession): real output in economy is decreasing and the unemployment rate is rising.
Trough: This is where you reach tour lowest point of GDP.
*One cycle is from T to T. (T = trough)
*Recession lasts about 14 months.
*The bulk of the cycle is the growth stage
Unit One: this is seriously never ending...
(1/14/15)
Price elasticity of demand: tells how drastically buyers will cut back/increase their demand for a good when their price rises/falls.
- 3 types of price elasticity of demands...
1) Elastic demand --> when a demand changes greatly due to a change in price. (wants)
EX: Substitutes like steak to chicken.
E is greater than One. [E > 1]
2) Inelastic demand --> demand will not change for a product even if the price changes. (needs)
EX: milk, gas, and salt.
E is less than one. [E < 1]
3) Unit Elastic -->
E is equal to one. [E = 1]
Equations...
Step 1. %△ in quantity:
*Price multiplied by Quantity gives you revenue.
Price elasticity of demand: tells how drastically buyers will cut back/increase their demand for a good when their price rises/falls.
- 3 types of price elasticity of demands...
1) Elastic demand --> when a demand changes greatly due to a change in price. (wants)
EX: Substitutes like steak to chicken.
E is greater than One. [E > 1]
2) Inelastic demand --> demand will not change for a product even if the price changes. (needs)
EX: milk, gas, and salt.
E is less than one. [E < 1]
3) Unit Elastic -->
E is equal to one. [E = 1]
Equations...
Step 1. %△ in quantity:
New Quantity - Old Quantity
Old Quantity
Step 2. %△ in price:
New Price - Old Price
Old Price
Step 3. Price Elasticity of Demand (PED):
%△ in Quantity
%△ in Price
*Price multiplied by Quantity gives you revenue.
Unit one... continued
(1/15/15)
Terms...
Surplus: QS > QD
(Quantity Supplied is greater than Quantity Demanded)
Shortage: QD > QS
(Quantity Demanded is greater than Quantity Supplied)
Marginal revenue: additional income from selling one more unit of good.
Equilibrium: Point in which supply and demand intersect, at this point resources are used efficiently.
Disequilibrium: When not used efficiently, not intersecting.
Price ceiling: government imposed price controlled on how high a price can be charged for a product or service. (EX: Rent control)
Price floor: government imposed price control on how low someone can charge for a product/service. (EX: Minimum wage)
Market equilibrium graphs:
Terms...
Surplus: QS > QD
(Quantity Supplied is greater than Quantity Demanded)
Shortage: QD > QS
(Quantity Demanded is greater than Quantity Supplied)
Marginal revenue: additional income from selling one more unit of good.
Equilibrium: Point in which supply and demand intersect, at this point resources are used efficiently.
Disequilibrium: When not used efficiently, not intersecting.
Price ceiling: government imposed price controlled on how high a price can be charged for a product or service. (EX: Rent control)
Price floor: government imposed price control on how low someone can charge for a product/service. (EX: Minimum wage)
Market equilibrium graphs:
Unit one demand and supply.
Demand and Supply
(DEMAND 1/12/15)
Demand: is the quantities that people are willing and able to buy at various prices.
-The image to the left is a simple demand curve, always downwards sloping.
The law of demand: There us an inverse relationship between price and quantity demanded.
-The image below explains the law very well.
1. △ in buyers taste. (advertising)
2. △ in number of buyers. (population)
3. △ in income.
a) Normal goods - goods that buyers buy more of when their income rises.
b) Inferior goods - goods that buyers buy less when their income rises.
4. △ in price of related goods.
a) Substitute goods - goods that serve roughly the same purpose to buyers.
b) Complementary goods - goods that are often consumed together.
5. △ in expectations. (the future)
(SUPPLY 1/15/15)
Supply: is the quantities that producers/sellers are willing and able to produce/sale at various prices.
-The image to the left is a simple supply curve, it is upwards sloping.
The law of supply: There is a direct relationship between price and quantity supply.
-The image below explains the law fairly well.
What causes a change in "quantity supply"? The answer is the △ in price. (△=change)
There are six determinants for the change in quantity supplied:
1. △ in weather.
2. △ in technology.
3. △ in cost of production.
4. △ in taxes or subsidies.
5. △ in number of sellers.
6. △ in expectations.
(DEMAND 1/12/15)
Demand: is the quantities that people are willing and able to buy at various prices.
-The image to the left is a simple demand curve, always downwards sloping.
The law of demand: There us an inverse relationship between price and quantity demanded.
-The image below explains the law very well.
 |
What causes a change in "quantity demanded"? The answer is the △ in price. (△=change)
There are five determinants. 1. △ in buyers taste. (advertising)
2. △ in number of buyers. (population)
3. △ in income.
a) Normal goods - goods that buyers buy more of when their income rises.
b) Inferior goods - goods that buyers buy less when their income rises.
4. △ in price of related goods.
a) Substitute goods - goods that serve roughly the same purpose to buyers.
b) Complementary goods - goods that are often consumed together.
5. △ in expectations. (the future)
(SUPPLY 1/15/15)
Supply: is the quantities that producers/sellers are willing and able to produce/sale at various prices.
-The image to the left is a simple supply curve, it is upwards sloping.
The law of supply: There is a direct relationship between price and quantity supply.
-The image below explains the law fairly well.
There are six determinants for the change in quantity supplied:
1. △ in weather.
2. △ in technology.
3. △ in cost of production.
4. △ in taxes or subsidies.
5. △ in number of sellers.
6. △ in expectations.
Unit one: PPF
(1/8/15)
4 factors of production...
1. Natural resources.
2. Labor. (work force)
3. Capital (physical & human)
- Physical: human made objects used to create other goods and services. (EX: machinery)
- Human: knowledge and skills gained through work and education.
4. Entrepreneurship
TERMS
- Trade-offs: alternatives that we give up whenever we choose one course of action over another.
- Opportunity cost: most desirable alternatives given up by making a decision.
- "Gun or Butter": Guns = military. Butter = agriculture.
- Production possibility graph: shows alternative ways to use resources.
Meanings behind each letter!
A- Efficient, but producing more refrigerators.
B- Efficient and attainable.
C- Efficient, but producing more cars.
X- Under-utilization. Attainable, but inefficient.
Y- Unattainable.
*A, B, & C = On the curve.
*X is inside of the curve. (recession, famine/war, underemployment on people/resources, and population loss)
*Y is outside of the curve. (economic growth, discovery of new resources/technology.)
The key assumptions for production possibility graph...
1. Two goods are priduced.
2. Full employment.
3. Fixed resources. (land, labor, & capital)
4. Fixed state of technology.
5. No international trade.
-Outside curve cannot produce.
4 factors of production...
1. Natural resources.
2. Labor. (work force)
3. Capital (physical & human)
- Physical: human made objects used to create other goods and services. (EX: machinery)
- Human: knowledge and skills gained through work and education.
4. Entrepreneurship
TERMS
- Trade-offs: alternatives that we give up whenever we choose one course of action over another.
- Opportunity cost: most desirable alternatives given up by making a decision.
- "Gun or Butter": Guns = military. Butter = agriculture.
- Production possibility graph: shows alternative ways to use resources.
Meanings behind each letter!
A- Efficient, but producing more refrigerators.
B- Efficient and attainable.
C- Efficient, but producing more cars.
X- Under-utilization. Attainable, but inefficient.
Y- Unattainable.
*A, B, & C = On the curve.
*X is inside of the curve. (recession, famine/war, underemployment on people/resources, and population loss)
*Y is outside of the curve. (economic growth, discovery of new resources/technology.)
The key assumptions for production possibility graph...
1. Two goods are priduced.
2. Full employment.
3. Fixed resources. (land, labor, & capital)
4. Fixed state of technology.
5. No international trade.
-Outside curve cannot produce.
Unit One
(1/7/15)
1. Macro Vs. Micro EconomicsMacro Economics: The study of the entire economy
Micro Economics: The study of parts of the economy. How households and firms make decisions and how they interact in markets. (EX: supply & demand)
2. Positive Vs. Normative Economics
Positive Economics: Claims that attempt to describe the world as it is,very descriptive. (EX: Minimum wage laws causes unemployment [Fact])
Normative Economics: Claims that attempt to describe how the world should be. (EX: The Government should raise the minimum wage [Opinion])
3. Needs Vs. Wants
Needs: Basic requirements for survival.
Wants: Desires of citizens much broader than your needs.
4. Scarcity Vs. Shortage
Scarcity: Most fundamental economic problem that all societies face. Satisfy unlimited wants to limited resources. (Permanent)
Shortage: Situation in which quantity demand is greater than quantity supply. (Temporary)
5. Goods Vs. Services
Goods: Tangible. It is bought, sold, traded, or produced.
-Consumer Goods: Goods that are intended for final use by the consumer. (EX: Candy)
-Capital Goods: Items used in the creation of other goods.
Services: Work that is performed. (EX: Janitor or barber)
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