Tuesday, January 24, 2017

Unit 1

Unit 1 




Basic Concepts of Economics  January 3, 2017


  1. Positive vs Normative
    • Pos. is describing the world as it really is (facts)
    • Norm. describes how the world should be (opinion)
  2. Needs vs Wants
    • Needs- basic requirements for survival
    • Wants- desires that we seek
  3. Scarcity vs Shortage 
    • Scarcity- fundamental problem that the whole world faces
      • satisfy unlimited wants with limited resources
    • Shortage- quantity demand exceeds quantity supply
  4. Goods vs Services
    • Goods- tangible commodities
      • anything you can touch
    • Capital- item used in creation of another good
    • Consumer- goods intended in final use by contenders
      • Ex: grapefruit juice, capital is grapefruit
    • Services- Work that is preformed for someone's entertainment
  5.  Factors of Production
    • Land- natural resources
    • Labor- Work exerted
    • Capital 
      • Human capital- when people acquire skills and knowledge through experience and education
      • Physical capital- deals with money and is tools, buildings and machinery 
    • Entrepreneurship- Risk taking and requires creativity and take lands, labor and capital to operate
  6. Trade offs opportunity cost
    • Alternative that we sacrifice when we make decision
    • next best alternative ex: next best choice after high school is college
  7. Guns and butter
    • refers to trade offs that country face when choosing whether to produce more or less of military goods or consumer goods
  8.  2 types of efficiency
    • Productive efficiency- products are being produced in the least costly way
      • any point on the PPC
    • Allacative efficiency- products being produced are the ones most desired by society
      • optimal point on PPC depends on desires of society
  9. PPC, also known as Production Possibilities Curve
  • PPC shows the carious combinations of output a nation can produce at a certain time, given its available resources and technology
  • The economy can produce efficiently on letters A, B, and C ; while points A, B, C, and D are ATTAINABLE, point D is being produced inefficiently due to under-utilization, unemployment, recession, famine and etc.
  • In the other hand, point E is UNATTAINABLE  using the current technology and also due to economic growth





Demand and Supply

  1. Demand- quantities that people are willing and able to buy at various prices
    • Law of demand-  inverse relationship between price and quantity demanded
    • Keep in mind that Δ= Change
  2. Causes of Δ in demand 
    • Δ in # of buyers(population)
    • Δ in buyer's taste(advertising)
    • Δ in income (normal or inferior goods)
      • normal goods- increase in income causes increase in demand
      • inferior goods- increase income causes fall in demand
    • Δ in the price of related goods
      • EX:
      • substitute good- substitute for coke is sprite
      • complimentary goods- plain hot dog but with mustard or ketchup
    • Δ in expectations(future)
  3. Supply- quantities that producers or sellers are willing and able to produce/sell at various prices
    • Law of supply- there is a direct relationship between price and quantity supply
  4. Causes of Δ supply
    • Δ in # of sellers
    • Δ in technology
    • Δ in cost of production
    • Δ in weather
    • Δ in tax or subsidies
      • subsidies- gov't $ given to for ex. farmers
    • Δ in exceptions

  • Price will always be on y-axis
  •  Δ in price will always be downward
  • IF YOU ARE TOO LAZY TO READ, THIS IS FOR YOUUUUUU!

Elasticity and Demand January 11, 2017
  • measure of how consumers act in Δ in price
  1. Elastic Demand
  • Demand that is very sensitive to Δ in price
  • Products is not necessity
  • there are available substitutes
  • Always greater than 1, E > 1
  1. Inelastic Demand
  • Demand that is not very sensitive in demand in price
  • Products is a necessity
  • There are few or no substitutes
  • E < 1
  1. Unitary Elastic
    • E = 1
  • Calculations
    • quantity:  New quantity - old quantity   /   Old quantity
    • Price:  New price - old price   /   Old price
    • PED: % Δ in quantity   /   % Δ in price
Supply Equations January 13, 2017
  1. Equations used when calculating
    • TFC + TVC = TC
    • AFC + AVC = ATC
    • TFC / Q = AFC
    • TVC / Q = AVC
    • TC / Q = ATC
    • New TC - Old TC = Marginal cost
  • Note that you can manipulate the equations algebraically to find other variables 
  • Fixed Cost- a cost that does not change no matter how a good is produced
  • Variable Cost- a cost that rises or falls depending upon how much is produced

HAVE A TEST OVER UNIT UNO TOMARROW?!? NO PROBLEM!!!


2 comments:

  1. I noticed that you did not include the formulas required to calculate cost and revenue. I have listed them below.

    Total Fixed Cost + Total Variable Cost = Total Cost
    Average Fixed Cost + Average Variable Cost = Average Total Cost
    Total Fixed Cost / Quantity = Average Fixed Cost
    Total Variable Cost / Quantity = Average Variable Cost
    Total Cost / Quantity = Average Total Cost
    Average Fixed Cost * Quantity = Total Fixed Cost
    Average Variable Cost * Quantity = Total Variable Cost
    Marginal Cost = New Total Cost - Old Total Cost

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  2. I liked how the blog was organized, however, I have noticed a missing date on the topic of "Demand and Supply". Perhaps you should try posting multiple times to keep a boundary between different topics while also keeping the date for the day you typed the notes. Otherwise, great job on your blog!

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