Week 1 Notes - microeconomics
Week 1 Notes - microeconomics ECON 201
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This 7 page Class Notes was uploaded by Lauren Huettemann on Wednesday September 2, 2015. The Class Notes belongs to ECON 201 at Ball State University taught by Zhukov in Summer 2015. Since its upload, it has received 213 views. For similar materials see Elementary Economics in Business at Ball State University.
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Date Created: 09/02/15
Ch 1 I Muzzy 939 O 4 Au nztm menumin iiixcd by39Et39gai wfmzzrt gaw 2 Cuauccdiiy Scanzfr rg ul veiJc ma can 332 used for 1011133133 8259 ii Goixbki 39 7quot 3 are11m ar 3333 1 tan ii Mw un chauluxngs Ecgni 13mm dznlamg by th gov t E39wazaczio costs reduced Exam angrrvsnudny39m at J 32 i R Q i hutmr quot3 3 bank 10 mummy funk ii Vesiumiuze in Sumac1 7 quotUsquot 33 e shn chilies 9 CHIquot 2 71 Em agzgiust 175951 7 533139 F 51 yeasta k tiay39reposscssel 11 Money Accountant phenomenon reinforced by legal power of gov t Commodity i Something of value that can be used for something else ii Goldsilver Fiat i Regular paper currency ii Medium of exchange legal tender declared by the gov t iii Transaction costs reduced from commodity to fiat Check i Instruction to bank to transfer funds ii Reduction in transaction cost iii More eff1cient Credit i Claim against physical assetlegal person 1 Car repossessed 2 Electronic payments eMoney eCash amp SmartCards i Credit cards held on apps ii Only have to carry around smart phone Functions of Money a b Store value value doesn t uctuate on daily basis Medium of exchange c Unit of account i Books are stated in some form of currency balance sheetsincome d Standard of deferred payment i Units which debt is denominated borrowing money ii Combo of store value medium of exchange unit of account III Graph a Shows relationship between 2 variables b Scatter Plots plots values of one variable against values of another SIZE ADE c Inverse relationship ticket price Attendance 100039s d Positive relationship i Both X and Y have to be risingfalling e Times series graph i Show values of variables over time Time Series Plot of Estimated Spending 20002012 900 a VI 0 Q 0 0 Estimated Spending Q 0 U G O O 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Year f Crosssectional graph i Shows values for different groups in population in particular point 1n t1me Favorite Types of Music hip hop classical rock Types of Music jazz Number of Students IV Self amp Social Interest a Self Interest choices best for individual b Social Interest choices best for society as a whole i 2 dimensions 1 Efficiency baking biggest pie 2 Equity sharing pie in the fairest way c When we pursue self interest we are led by the invisible hand to promote social interest Adam Smith V Globalization a Expansion of international trade and production of components and services by firms in other countries VI VII VIII b Bringing rapid income growth Information Age a Parallel with IndustrialAgricultural Revolution b Microprocessorcomputer chip responsible for last 30 yrs changes Choice is a Tradeoff a Exchange b When making a choice selecting from What s available c Choices tradeoffs i When you choose one ting you give up something else ii Determined by personal preference d Rational choice i One uses available resources to best achieve objective ii Comparing bene ts and costs iii Net bene t bene t cost Margin a Comparing relevant alternatives b Marginal cost i Opportunity cost of one unit increase in activity ii What you must give up to get one additional unit iii Increases more you do of activity c Marginal bene t d One unit increase of bene t e Gain from having one more unit f Measured by What you re willing to give up g Diminishes Economics social science studies choices that people make While dealing with scarcity incentives and arrangements Scarcity inability to satisfy all wants Micro study of choices that people and businesses make way choices interact and in uenced by gov t Market based off greatest consumer demand Macro studies aggregate effect of economy on choices by people Economic Wide effect Ceteris Paribus all other things remain constant Positive Statement something that can be tested Normative Statement subject to personal values and cannot be tested opinion Independent variable values are determined outside of model equation Dependent variable values change according to change in values of 1 independent variable fXy5x3 y is dependent on X 0 value output range image set of all resulting outputs X is independent meaning it can be any variable 0 argument input domain set of all inputs Slope rise over run is the change in values measured on yaXis divided by XaXis Y1 Y2Xl X2 Incentive rewardpenalty encouragesdiscourages an action Economic model description of economy that includes only necessary things
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