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1. Economic models: simplification of reality built with some assumptions to help economists make predictionsDon't forget about the age old question of What is the only element that has no solod phase?

2. Cetris Paribus

• Other things being equal
• Hold things constant and don’t change too many at once

• Focus on  the change of one variable
• Isolate the effect of that variable

If you want to learn more check out What are the challenges of racism?

Danger of Faulty Assumptions

• Examine and reevaluate i.e Housing Market Crash
• Multiple made to simplify the model
• If you go on a diet and an exercise plan, how do you know which contributes to weight loss?

We also discuss several other topics like What is a great island of stars in space, all held together by gravity and orbiting a common center?

3. (PPF) Productions Possibilities Frontier

• Combinations of outputs that a society can produce if all of its resources are being used efficiently

Assumptions

→ Simplified 2 good analysisWe also discuss several other topics like What are the steps in finding the quartiles?

→ resources fixed

→ technology fixed

All Points on PPF are EfficientDon't forget about the age old question of Who was known as the warrior pope?

→ must give up one good to ↑ the other

        → factors on scarcity and limited resourcesWe also discuss several other topics like What was the effect of indian removal act of 1830?

        Inefficient points: points E and F

        Workers goofing off, unused buildings

What if the PPE shifts? This means some points that were previously unattainable are now possible to produce. Reasons behind this could be new resources / technology that affects production of one or both

i.e. If dairy production increases, then butter will ↑ and guns will stay constant.

In a wartown, to produce more guns there should be a decrease in butter.

Move opp. → Negative slope

PPF is used to describe production combinations that are efficient and possible

• No point → the other (All Are Efficient Found on the PPF)
• Doesn’t say which to choose, just gives options

4. Efficient: all resources fully used so there is a balance between more of one good and less of the other

• Points inside/outside of the PPF are inefficient and leave resources unused or not fully used
• PPF does not tell what is sold
• Unemployment results in pints inside the PPF because of ↓ in labor

5. Consumer Goods: goods meant for current consumption

        ⤷ food, housing, clothing, entertainment

6. Capital Goods: goods that help produce other valuable goods

        ⤷ i.e. buildings, factories, roads, machinery, computers

⤷ used - repeatedly for production of other goods

7. Investment: using resources to produce new capital

8. Trade-Off Resources: resources that can be used for the production of current consumer/capital goods

                                        More consumer goods with potential to shift out in

the future

                                                → PPF shifts because more capital today allows

more resources in the future.

Investment takes time and the outcome is not always apparent.

        ⤷ reasons countries are hesitant to invest

i.e. China and India invest more than US and Europe

Macroeconomics

Microeconomics

• Focus on the economy as a whole and its economic aggregates (good markets and industries, etc)
• Total output        

• Individual units (households, firms, a single industry)
• Single product firm
• How much is produced of a good?        

Macroeconomics

Microeconomics

• Total unemployment
• Aggregate prices (averages usually) of the majority of products

• Where income goes?
• How much to work
• Price?

9. Goods Domestic Product: the market value of all final goods and services produced in a nation within a specific period of time (typically annually)

References: