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AU - PR 2020 - ECON 2020 Exam 2 Study Guide - Study Guide

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AU - PR 2020 - ECON 2020 Exam 2 Study Guide - Study Guide

School: Auburn University
Department: Public Relations
Course: Principles of Economics: Microeconomics
Professor: William Finck
Term: Fall 2016
Tags: Econ, micro, Microeconomic, economic, Economics, and Microeconomics
Name: ECON 2020 Exam 2 Study Guide
Description: These notes cover the materials that were provided on the study guide which touch on elasticity, PPF graphs, absolute and comparative advantage, trade, tariff, etc. The problem set is not in here because we have not yet went over the correct answers.
Uploaded: 09/19/2016
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background image ECON 2020 Exam 2 Study Guide  TERMS:     Production   Possibilities Frontier (PPF)  – curve that graphs all possible  combinations of two given goods that an economy can produce     Law of Increasing  Opportunity Costs  – A s production of good increases,  the opportunity cost of producing an additional unit rises    Opportunity cost = number of units of the other good given up    Economic growth  –  An outward shift of the PPF    Terms  of trade   – relative  price of one good in terms of another  good    Tariff  –  a tax levied on goods imported into a country     Import quota   a specific limit or maximum quantity of a good permitted  to be imported into a country during a given period.     Elasticity   a measure of the relative responsiveness of one variable to a  change in another  
    Price elasticity of demand  –  the ratio of the percent change in the  quantity demanded to the percent change in the price    Elastic  –  %ΔQd > %ΔP; flat     Perfectly   elastic   a tiny change in P causes an infinite change in Qd; ∞     Unit elasticity  –  %ΔQd = %ΔP (very boring)     Inelastic  –  %ΔQd < %ΔP; steep     Perfectly  inelastic    a huge change in P causes no change in Qd; 0   GRAPHS:    PPF  Example #1  (Constant Opportunity Cost)  [Also a concept]  
background image   A. Inefficient (unemployment) 
B.  Efficient (full employment) 
C.  Unattainable (given our assumptions) 
NOTE: We can measure changes in unemployment as the production 
point moves  
    A to B: decrease in unemployment     B to A: Increase in unemployment  NOTE: once full employment is attained, the only way to increase the 
production of one good is to take resources away from the other 
background image   Example #1: Efficient Combinations  Fish  Coconuts  45  36  27  18  Opp.  Cost of a  Fish    ----    9C    9C    9C    9C    9C    OPPORTUNITY COST OF Nth UNIT of X  Quantity of Y at n-1 – Quantity  of Y at n  Law of increasing opportunity costs  – as production of good increases,  the opportunity cost of producing an additional unit rises    Opportunity cost = number of units of the other good given up  Fish  Coconuts  45  42  36  27  15  Opp.  Cost of a  Fish    ----    3C    6C    9C    12C    15C     
background image Example #2  (Increasing Opportunity Cost)  [Also a concept]       Point C is now attainable and efficient!       Point D is only attainable through  economic growth  or  trade Economic Growth     An outward shift of the PPF  Causes:  1.  An increase in the supply of resources 
2.  A technological improvement 
3.  A change in regulation 

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School: Auburn University
Department: Public Relations
Course: Principles of Economics: Microeconomics
Professor: William Finck
Term: Fall 2016
Tags: Econ, micro, Microeconomic, economic, Economics, and Microeconomics
Name: ECON 2020 Exam 2 Study Guide
Description: These notes cover the materials that were provided on the study guide which touch on elasticity, PPF graphs, absolute and comparative advantage, trade, tariff, etc. The problem set is not in here because we have not yet went over the correct answers.
Uploaded: 09/19/2016
17 Pages 66 Views 52 Unlocks
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  • Notes, Study Guides, Flashcards + More!
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