ECON 201 (Microeconomics) Notes: Week 3
ECON 201 (Microeconomics) Notes: Week 3 Econ 201
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This 3 page Class Notes was uploaded by Jensine Bonner on Sunday February 21, 2016. The Class Notes belongs to Econ 201 at Towson University taught by Dr. Leppo II in Winter 2016. Since its upload, it has received 34 views. For similar materials see Microeconomic Principles in Economcs at Towson University.
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Date Created: 02/21/16
ECON 201: Microeconomics Notes taken, interpreted, and formatted by: Jensine Bonner Week 3 of Notes: Last section of Chapter 3 & Beginning of Chapter 4 Key (Abbreviations of Important Terms): (HH)- Household (BF) - Business Firm NEW (P)- price NEW (QD) – Quantity Demand (G)- Government (s) - services (g) – goods NEW (QS)- Quantity Supply (l)- labor (K)- Capital (S)- supply (MC)- Marginal Cost (MP)- Marginal Principle (MB)- Marginal Benefit 2/15/16 No School (Snow Day) 2/17/16 (Continuation of Information on the Circular Flow Diagram) - The product(s) that are demanded and product(s) supplied have to match up - For BF to put more products into the market, they need more input (from the HH) so, more $$ goes back to the HH - The product that is demanded is the catalyst for the Circular Flow Diagram - Everything is ultimately paid by the HH - The cause of any recession or depression is over-spending. So in order to fix the problem(s) that are presented, something has to be taken back - Every section of the economy is taxed w/either a direct o’ indirect tax - The avg. person will pay 50% o’ income back by the end of the year - A BF would increase prices if the taxes were high - There is no competition (at least no true) competition with anyone - The Gov. tends to be insufficient when they don’t compete with each other - As the consumer, we are always making choices to decide how to spend $ How do you stimulate economy? - Private sector Definitions/Terms Market Economy- People specialize and exchange goods/services in a market Culturally Planned Economy- The Government decides (What, how much, & how) to produce and who consumes Export- Good(s) that are produced domestically and sold abroad Import- A good that is produced abroad and sold domestically End of Chapter 3 2/19/16 Beginning of Chapter 4: Supply & Demand; Market Equilibrium Perfect Competition A market that has many buyers & sellers. There are so many that no (1) person(s) has control over the entire market Free Entry & Exit When there is no external cost associated w/ the item Homogeneous Product The products are identical to each other- interchangeable *Good/Closest example would be the agriculture market* Perfect Knowledge About a particular market No Collusion 2 or more BF get together in order to control the market In this market, a monopoly cannot be created Law of Demand (P) price & quantity demand (QD) vary inversely. - When P increases, QD decreases. This is an example of ceteris paribus. This will produce a negatively sloped curve Aggregate Demand= Total Demand - Within the demand that is presented, there can be individual demand curves - D & the QD are different When the curve moves change in demand If still on the same curve, but @ a different point on the curve then, it’s a change in QD Law of Supply *Based on BF* P & QS vary directly - An increase in P an increase in QS is ceteris paribus for the Law of Supply, and will produce a positively sloped curve - When a curve moves to the left, it decreases. When it moves to the right, it increases Equilibrium QD=QS (Q*) which translates to MB=MC Market Clearing Price (P*) - The price producers are willing to sell at & what consumers are willing to sell at everyone wins market clear 4 Primary Types of Goods Normal Good: As income increases; consumers want more Inferior Good: As income increases; consumers want less Substitute Good: (2) goods that are related in such a way that as the price of (1) good increases, the demand for the other increases (Ex. Coke & Pepsi) Complimentary Good(s): (2) goods related in such a way that as the price of (1) good increases, the demand for the other good decreases (Ex. An increase in Peanut Butter prices you’ll buy less Jelly) End of Week 3 Notes. I hope that they were helpful to you. Notes will be uploaded weekly, so be sure to come back again! Up Next: Notes and a study guide for the upcoming test on 2/26 - Jensine
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