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Intro to Econ & PPC
| Question | Answer |
|---|---|
| Economics | Economics is the study of choices. |
| Scarcity | Unlimited wants but limited resources |
| MICROeconomics | The study of economics on a small scale. (Ex: Supply & Deman in SPECIFIC markets, production costs, etc.) |
| MACROeconomics | The study of economics on a large scale. (Ex: Economic growth, government spending, inflation, unemployment, etc.) |
| 5 key Assumptions of Economics | 1) Scarcity exists 2) Every choice has a trade-off 3) Everyone is self interested 4) Everyone makes decisions by comparing the marginal costs/benefits of every choice 5) Real-life situations can be explained and analyzed through graphs. |
| Price vs. Cost | Price: Amount customers pay Cost: Amount seller pays to produce a good |
| Investment | The money spent by businesses to improve their production. |
| 4 Factors of Production | 1) Land: All natural resources you need to produce 2) Labor: Effort devoted to being paid for 3) Capital: resource/tool (physical) 4) Entrepeneurship: Ambitious leaders that combine the other factors of production to create goods & services. |
| Human Capitol | Any skill gained through education and experience. |
| Three Benefits of trade | 1) Trade makes people better off when preferences differ. 2) Trade increases productivity through specialization & the division of knowledge. 3) Trade increases productivity through specialization according to comparative knowledge. |
| Globalization | The world (as a whole) can be more specialized, meaning that our "world knowledge" increases. |
| Per Unit Opportunity Cost | Opportunity cost / Units gained |
| Absolute Advantage | The producer that can produce the most output OR req. the least amount of inputs (resources) |
| Comparative Advantage | The producer w/ lowest opportunity cost between 2+ products that take time/resources |
| Demand curve | A graphical representation of a demand schedule (downward sloping & assume ALL factors are held constant) |
| Shifters of Demand | 1) Tastes & Preferences 2) Number of Consumners 3) Price of Related Goods 4) Income 5) Future Expectations |
| Supply | Different quantities of a good that sellers are willing and able to sell |
| Law of Supply | There is a direct (positive) relationship between price & quantity supplied |
| Shifters of SUpply | 1) Prices/availability of inputs (resources) 2) Number of sellers 3) Technology 4) Government action: Taxes and subsidies 5) Expectations of Future Profit |
| GDP | The dollar value of all final goods and services produced within a country's borders in one year. |
| Per Capita GDP | GDP per person (GDP / population = per Capita)... Average products each person makes |
| Change in GDP | (year 2 - year 1/ year 1) x 100 |
| Expenditures Approach | GCIX (Government spending, Consumer spending, Investment, net eXports) |
| National GDP | GDP measured in CURRENT prices (Does not account for inflation from year to year) |
| Real GDP | GDP expressed in constant, or unchanging, dollars (Adjusts for inflation) |
| NOT included in GDP | 1) Intermediate goods: goods inside the final product 2) Nonproduction transaction: financial productions (nothing produced) / used goods 3) Non-market & illegal activities: things made at home-- household production |
Created by:
chianti
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