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NYU - ECON 101 - Study Guide - Midterm

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NYU - ECON 101 - Study Guide - Midterm

School: New York University
Department: Engineering
Course: Introduction to Microeconomics
Professor: Professor Bhiladwalla
Term: Fall 2016
Tags: Microeconomics, micro, Economics, and Econ
Name: Microeconomics Midterm 1 Study Guide
Description: These notes are basically a compilation of the past four weeks of notes (a little less extensive though)...Aplia readings are incorporated into these notes. Combining these notes with the practice midterm as well as Aplia problems should put you in a good place in regards to preparation for the exam. Good luck to all!
Uploaded: 10/04/2016
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background image Midterm 1: Thursday, October 6th, 2016 3:30-4:45 
Bring 4-function calculator  
Chapters 1 and 2 :   Why study economics??     it teaches us to make choices (both time and monetary resources are limited) given  scarce resources (time and money) and technology   Opportunity Cost    --*the most fundamental concept*    --where it comes from:      -we are given choices and we make choices everyday under conditions of re- source scarcity     --the value of the next best alternative (not everything else you could have done)  Implicit vs. Explicit      --explicit: you can see the cost      ex) a cup of coffee    --implicit: cannot see but holds its value       ex) ski trip   Categories of Resources:    --Labor: providing a service, using time and energy    --Capital: goods produced that are used to produce other things      -can be machines (like computers) or human capital (training skills)     --Land: natural resources; physical space on which structures are built     --Entrepreneurship: basic function is combining all the above factors to produce the  good or services  *society must decide on HOW it will ALLOCATE it's scarce resources between COMPETING  wants* 

NOTE: Do ALL goods have an OC?  YES 
  ex.--Google, Yahoo, free lunches? ALL HAVE OC, like the resources (explicit costs),  people working at Yahoo or Google, food used to make lunches, etc...  Production Possibility Frontier      --a smooth curve on the graph once you connect all the dots     --shows all combinations of 2 goods that can be produced with a given amount of re- sources and a given technology     --all points on the PPF are attainable choices  
background image   --POINT W: unattainable points would be above the graph, points underneath the  curve means that you are not using all given resources OR inefficient utilization of resources  (mismatching skills to job)      -product efficiency vs. product inefficiency    ECONOMIC SYSTEMS    in a free market economy like United States, we have something called Specialization,  which has its gains    Gains of Specialization     --expertise development    --increased productivity     --leads to a HIGHER STANDARD OF LIVING   Comparative Advantage  labor required for:      1 fish  I cup of berries   Maryanne   1 hr    1 hr  Gilligan    3 hrs    1 1/2 hrs  Maryanne has ABSOLUTE advantage  Maryanne's OC of:
 1 cup of berries=1 fish  1 fish=1 cup of berries
 Gilligan's OC of:  1 cup of berries=1/2 a fish  1 fish=2 cups of berries        --Maryanne has comparative advantage for making fish    --Gilligan has comparative advantages for making berries   A defining feature of any market:  PRICE (P)   P =amount of money paid to a seller for a good, service, or resource     --What does price do?       -It helps the entrepreneur attain information and how to make future decision  regarding goods and services    --prices incorporate opportunity cost (OC)  
background image     -ex) price of a TV set is $500: this means resources sacrificed to make this a TV  set is $500        suppose it is free: too many sets would be produced and there would be  little resources left for other goods   Chapter 3    In a market...  perfect vs. imperfect competition     --perfect: many sellers, the good is a standardized product at least in the eyes of the  consumer, no power over price      -ex) if there are thousands of suppliers in the wheat market, the market share for  each seller is very small    --imperfect: few sellers      -ex) in the US auto market, not as many suppliers and so market share is larger ;  this then gives them the power to change prices  DEMAND:     --referring to the behavior of the buyers  Quantity Demanded (QD):  amount  of any good/service that  all  buyers decide to choose during  a period of time  given constraints  (income, prices)    --implies choice: there is always opportunity cost       ex) if coffee is $1, I buy more; if coffee is $5, I buy less    --depends on price (P)    --it is a point ALONG the curve 
background image Example: maple syrup     --the higher the price per bottle, the less people will want the syrup   $1    75,000  $2    60,000  ...        ...  NOTE: price (P) is on y axis, quantity on x axis (this applied to both demand AND supply)   Demand vs quantity demanded cont'd    --demand: refers to the whole curve       -when one of the factors held constant changes       -increase in quantity, then curve shifts right     ex) income increase  Factors That Change The Demand Curve:
 income and wealth        -wealth: everything I own - everything I over       -measure over a period of time:  flow variable    Income Change/  Wealth      normal (variable)    inferior(variable)  Increase      demand increase    decrease in demand   Decrease      demand decrease    increase in demand   prices of related goods      - substitute good : coffee is good x, tea is good y: if the price of tea(y) doubles,  then someone will drink more coffee in order to compensate...the quantity of coffee changes  but not the price       - complimentary good : coffee and creamer; if the price of coffee shoots up, then  I will buy less creamer 
population    --population increase, more buyers    --more buyers, therefore an increase in demand      
background image expected price      ex) I like dark chocolate, but cocoa beans are scarce, so dark chocolate price will  increase: I buy more dark chocolate NOW      -if buyers expect prices to rise, the current demand will shoot up
 tastes/preferences     --if buyers start preferring an alternate good, then the demand of a current good will fall  and the demand curve will shift LEFT    ex) lost desire for apples and decided to opt for mangoes instead; demand for man- goes rises and demand for apples decreased  SUPPLY: referring to the behavior of the sellers            --comes from the sellers: they choose to supply @ any P quantity that maximizes profit    -- quantity supplied       -relationship between P and amount of good/service offered at any point P      -positive relationship    **the constitutes to the Law of Supply**    --when price of good rises, everything else at a constant, the quantity of good supplied  will rise     --when sellers can get higher prices for goods, producing and selling become more  profitable    --a change in price means a shift along the curve    --a curve shift is due to factors that are not held constant anymore   Factors that Change the Supply Curve: input price     --if they rise, supply less (b/c resources were more expensive) and supply curve shifts  LEFT  

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School: New York University
Department: Engineering
Course: Introduction to Microeconomics
Professor: Professor Bhiladwalla
Term: Fall 2016
Tags: Microeconomics, micro, Economics, and Econ
Name: Microeconomics Midterm 1 Study Guide
Description: These notes are basically a compilation of the past four weeks of notes (a little less extensive though)...Aplia readings are incorporated into these notes. Combining these notes with the practice midterm as well as Aplia problems should put you in a good place in regards to preparation for the exam. Good luck to all!
Uploaded: 10/04/2016
22 Pages 55 Views 44 Unlocks
  • Better Grades Guarantee
  • 24/7 Homework help
  • Notes, Study Guides, Flashcards + More!
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