Unit 1; Day 6

Peak- Highest point of real GDP; phase exibits lowest unemployment, greatest amount of spending. Inflation becomes problem

Expansion- AKA recovery; Real GDP Increasing due to increase in spending, decrease in unemployment

Contraction/ Recession- Real GDP declining for 6 months due to reduc. in spending, increase in unemployment

Trough- Lowest point of real GDP; exibits highest amount of unemployment, least amount of spending

Ex. 

Unit 1; Day 5

Fixed cost- Cost that does not change eg. rent, mortgage, insurance, salary

Variable Cost- Rises or falls depending on how much is produced eg. electricity summer+winter
Marginal Cost- cost of producing 1 more unit of a good

Total Fixed Cost= TFC; Total Variable Cost= TVC; Total Cost= TC; AFC= Average Fixed Cost; AVC= Average Variable Cost; AVT= Average Total Cost; Q= Quantity.
TFC+TVC= TC
AFC+AVC= ATC
TFC/Q=AFC
TVC/Q=AVC
TC/Q=ATC
TFC=AFC*Q
TVC=AVC*Q

TCn-TCn-1= MC

Unit 1; Day 4

Elasticity demand-measures of how consumers react to price

Elastic Demand- very sensitive to change in price, E>1

Product is not a necessity

Avail. substitutes

Inelastic Demand- Not very sensitive to change in price, E<1

Product is a necessity

Few or no substitutes

People will buy no matter what

Unit/Unitary Elastic- E=1

Elastic(Sbs avail)

Soda

Steaks

Inelastic(No Sbs)

Gas

insulin

Price Elasticity of Demand(PED)- 3 step formula

Quantity

(New quantity- Old Quantity) / old quantity

Price

(New price- Old price)/ Old price

PED

 (% Change in quantity Demand )/(%change in price)

Total Revenue- Total amount of money that a firm receives from selling goods and services

TR=PxQ

Unit 1; Day 3

Normal good-Increase in income causes increase in  demand

Inferior good- increase in income causes fall in demand

Complementary goods- burger and fries

Substitute goods- mustard for ketchup

Video- Example of Complementary vs Substitute Goods

Supply is quantity producers/ sellers are willing to produce at varying prices.

Law of Supply- Direct relationship between price and quantity supply

Causes of a Change in Supply

Δ Technology

Δ Weather

Δ Cost of Production

Δ # of Sellers

Δ Taxes/ Subsidies(Govt $$)

Δ Expectation

Unit 1; Day 2

What causes the PPC/PPF to shift?
 Advances in technology
 Change in Resources
 Change in labor force
 economic growth
 Natural disaster/war/famine
 More education/training(Human Capital) 

5 Determinants that cause a change in demand
Δ Buyer's Taste (ads)
Δ # of Buyers (Population)
Δ Income (Normal vs Inferior Good)
Δ Price of Related goods (Complementary and Substitute)
Δ Expectations

Demand is quantities that people are willing/ able to buy at varying prices
Law of Demand: Inverse relationship between price and quantity demanded


A Demand Curve

Unit 1; Day 1

Macroeconomics- Study of economy as a whole eg. inflation wage laws and internet trade

Microeconomics- study of individual/specific units of economy eg. supply demand, market structure, business orgs.

Positive Economic- Attempt to describe world as as is "What is"

Normative Economics- Attempt to prescribe how world should be "Ought to be"

Needs- Basic requirement for survival eg. food, water, shelter

Wants- Desires of citizens

Goods- Tangible commodities

            Capital- Used in creation of other goods (machines)

            Consumer- Intended for final use by consumer

Services- Work performed for someone else

Scarcity- Most fundamental problem all societies face. Trying to satisfy unlimited wants w/ limited resources (oil)

Shortage-Quantity demanded is greater than supply

Factors of Production- Land, Labor, Capitol, Entrepreneurship.

Trade Offs- alternatives that we give up whenever we choose one course of action over another

Opportunity Cost- next best alternative

Production Possibility Curve(PPC)- shows alternative way to use community resources

Frontier(PPF)

Graph(PPG)

4 Assumptions of a PPG: Two goods. Fixed resources(land capital, labor, entrepreneurship), fixed tech, full employment of resources

Efficiency- using resources in a  way maximizing production

Allocative Efficiency- products being produced are the ones that a society desires

Productive Efficiency- products being produced in least productive way; reps any point on the PPC

Under Utilization- using fewer resources than an economy is capable of using

3 Types of movement that occur within PPG-

Inside PPC- occurs when resources are unemployed or underemployed (Attainable+Inefficient)

Along PPC-  moving back and forth on the curve (Attainable+Efficient)

Shifts the PPC- shifting of the curve outward or inward(Unattainable)

Video- Production Possibility Graphs

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