ECON 201 Unit 1 Study Guide
ECON 201 Unit 1 Study Guide ECON 201
University of Louisiana at Lafayette
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This 4 page Study Guide was uploaded by Yasmeen Mohamed on Friday February 5, 2016. The Study Guide belongs to ECON 201 at University of Louisiana at Lafayette taught by John Must in Spring 2016. Since its upload, it has received 33 views. For similar materials see Principles of Macroeconomics in Economcs at University of Louisiana at Lafayette.
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Date Created: 02/05/16
Econ 201 John Must Unit 1 Macroeconomics Unit 1 Study Guide Topics and Solutions: Concept of Opportunity Cost Answer: Price of how much you would have made after making a choice. To obtain more of sth, society gives up the next best thing. Ex: $15,000 for school or $20,000 for a job. If you choose school, opportunity cost is $20,000-$15,000=$5,000. Surplus: Price Floor above equilibrium Shortage: Price Ceiling below Equilibrium Production Possibility Curve: combination of 2 goods produced with given fixed resources Allocative efficiency: Mix of goods/services valued by society Memorize: Demand Curve Supply Curve Budget Line Production Possibility Curve Econ 201 John Must Unit 1 Circular flow model: 5 fundamental questions [MARKET SYSTEM]: 1. What goods will be produced? - TR > TC - What consumers want! (Dollar Votes) 2. How will the goods be produced? - Productive Efficiency (Cheapest way) 3. Who will get the goods? - Whoever can afford it! 4. How will the system accommodate change? - Preferences, Tech, resources 5. How will the system promote progress? - Competition, Tech Econ 201 John Must Unit 1 Ind and Business, Private property Freedom of choice Self-interest Competition active but limited gov Division of Labor: Specialization of some process Determinants of Demand: Determinants of Supply: Preferences Resource Prices Consumer income Tech Prices of RELATED goods Taxes and Sub CONSUMER expectations Prices of OTHER goods Number of BUYERS in the market PRODUCER expectations Number of SELLERS in the market What does Supply curve tell us? – Resources available and willingness to buy. What does Demand curve tell us? – Person’s willingness and ability to buy. Equilibrium: Where quantity demanded = quantity supplied NORMAL GOOD: Increase Income, Increase Demand [Name Brands] INFERIOR GOOD: Increase Income, Decrease Demand [Generic] Substitute Good: Even exchange of goods (Banana instead of Apple) Complimentary Good: Bought/sold together (Hot Dog and Buns) Law of diminishing marginal utility: The more we have of something, the less in demand it is. 4 Resources: a. Land b. Labor c. Capital d. Entrepreneurial Activity e. Money: medium of exchange Utility: [Pleasure/ Satisfaction] Usefulness consumers get from a product. MACRO ECON: gov and business interaction MICRO ECON: study of individual interaction Positive Economics: Facts Econ 201 John Must Unit 1 Normative Economics: Judgments/assumptions CEREBUS PARIBUS: All things equal! Laissez-Faire: Let it be [minimal gov role] Black Markets: counterfeit a product in demand; negotiating. Why does Gov give subsidies? – Cost of production decreases, supply increases.
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