Econ 302 Exam1

it is the study of production, distribution and consumption of goods and services. Social science concerned with the use of scarce resources to obtain the maximum satisfaction of the unlimited wants of society. Is concerned with what is and focuses on facts and cause and effect relationshios.

The study of measures of economic activity GDP, total income, total output, total imports, total exports, to government expenditures. EX entire auto industry

is the study of individual units, firms and industries & demographic groups.

incorporates value judgements as to what the world should be like

The total market value of all final goodsand services produced annually within the boundaries of the US, whether by US or foreign supplied resources.

Recurring increases and decreases in the level of economic activity over periods of years; consisting of peak, recession, trough and expansion phases.

a rise in the general level of prices in an economy

Changes in government spending and tax collections designed to achieve full employment and non-inflationary domestic outout; also called discretionary discal policy.

The manipulation of the money supply and interest rates, usually by the central bank, to offset fluctuations in the business cycle.

Labor (Quantity & Quality of workforce(health trainng), Land (natural resources (water, forest, temp, zone), Capital (plant and equipment) Infrastructure (roads, dams, bridges, sewers), Entrepreneurial Ability (risk takers)

Allocated efficiency (making goods and services most wanted by the public) & Productive (economic eddiciency(making things at the lowest cost)

Laws of opportunity/law of increasing opportunity

and models are generalizations based on observations of facts

are not quantivetatively exact but are useful in predicition for control for and adjusting

based on experience or observations

does the rooster cause the sun to rise? after this therefore because of this

whats true for the individual is not always true for the groups

Whats true or good for the group is not always true for the individual

a setting where buyers and sellers come together.

A schedule showing the vatious amounts of A product or servies which buyers are willing and able to purchase at each price at each price in a series of prices during a special time period.

a change in price

price of automobiles in Miami

land and capital

obtaining the max output from available resources

rent, wages, interest and profits respectively

a consumer incomes have fallen

an increase in demand

an increase in demand

a change in price

a change in the number of suppliers

Output over imput (labor hours)

Increase unemployment, tends to increase prices (when min wage rises faster than productivity), it tends to encourage illegal immigration, it tends to encourage emmigration, kids drop earlt to take high paying jobs. Europe usually has higher min wages than the US and higher unemployment. Most economists are not rabid about this because we know that when wages rise too high, people are replaced by machines if at all EX: elevator operators, gas station attendants, checkouts

Micro is concerned with individual units such as a person, macro examines the economy as a whole or its basic subdivisions or aggregates such as government, household, and business sectors.

producing at the lowest costs.

price controls do not permit the free flow of market forces.

number of buyers, taste & preferences, income, expectations, price of related goods,

Number of suppliers, technology, resource prices, taxes and subsides, expectation/price, PRG (price of related goods), weather

marginal analysis - comparisons of marginal benefirs and marginal costs, usually for decision makeing. To economists, "marginal" means "extra" "additions" or a change in.

Straight line budget constraint with a constant slope indicates constant oppurtunity costs. 1 DVD is 2 books. 1/2 DVD = 1 book

capital goods includes all manufactured aids used in producing consumer goods and services. All factory, storage, tansportation, and distribution facilities as well as tools and machinery. purchase of capital is a good investment

Economic growth, full employment, price stability, balance of trade. (price stability and full employ conflict), (economic growth and full employment complementary)

Monetary policy, fiscal policy

Concerned with what is.... focuses on facts and cause and effect relationships. focuses on theory development, and theory testing. avoids value judgements, tries to establish scientific statements based on economic behavior and deals with what the economy is actually like.

Concerned with what ought to be. incorporates value judgements about what the economy should be like or what particular policy actions should be recommended to achieve a desired goal (policy economics).

You must think carefully b4 concluding that because even A precedes even B, A is the cause of B. This kind of faulty reasoning is known as post hoc, ergo propter hoc or AFTER THIS, THEREFORE BECAUSE OF THIS. EX: hire a new coach, team wins???

if a figure slopes upward to the right it is a direct relationship (or positive relationship) between income and consumption

Two variables change in two opposite directions. When ticket prices increase, attendance decrease, when tickets decrease, attendance increases.

The curve is a "constraint" because it shows the limit of attainable outputs. Points on the curve are attainable as long as the economy uses all of its avaibable resources. Points insude the curve are attainable but show less total output-less desirable. Points inside curve imply that the economy could have more of both industrial A and B to achieve full employment of its resources. Points outside the curve are unattainable with the current availability of resources and technology.

the economy is employing all its available resources.

the quanitiy and quality of the factors of production are fixed.

the state of technology (the methods used to produce output) is constant

the economy is producting only two goods: pizzas and industrial robots. Pizza symbolizes consummer good (satisfy wants directly), robots symbolize capital goods (satisfy indirectly by making possible more efficient production of consumer goods.

The curve is bowed out from the origin of the graph. It gives up successively larger amounts to aquire equal increments of something. The slope becomes steeper as it is moved from A to E.

THe optimal quantity of production is indicated by the point at the axis. One more point would exceed the optimal quanity in excess and not be maginally benefitial of cost.

In any specific period a buyer of a product will derive less satisfaction from each successive unit of product consumed.

The law of demand in terms of income and substitution can be explained by income effect that indicates that a lower price increases the pruchasing power of a buyers money income. Enabling ability to purchase more of a product.

suggests that at a lower price buyers have the incentive to substitute what is now a less expensive product for similar products that are now relatively more expensive.

Normal(superior) are products whose demand varies directly with money income. Inferior is whose goods vary inversly with income.

Substitute is an increase/decrease in the price of one will increase/decrease the demand of the other. Complemetary are demanded jointly (cell phone/service). Unrelated goods (independant) not related (butter and golf balls)

Price is the price where the intentions of buyers and sellers match. Qunatity is the quanitity demanded and quality supplied at the equilibrium price in a competive market. Point is graphicaly indicated by the intersection of the supply curve and the demand curve.

Allocative is the particular mix of goods and serves most highlyy valued by society (min-cost production assumed). Productive is the production of any particular good in the least costly way

Ceining sets the max legal price a seller may charge for a product or service. Floor is a minimum price fixed by the government.

the ability of the competive forces of supply and demand to establish a price at which selling and buying decisions are consistent.

a competive market not only rations goods to consumers but also allocates societys resources efficiently to the particular product. Productive and allocative efficiency

in economics, spending for the production and accumulation of capital and additions to inventories (contrasts with financial investment)

The purchase of a financial asset (such as a stock, bond, or mutual fund) or real asset (such as a house, land or factories) or the building of such assets in the expectation of financial gain

Capitalism an economic system in which property resources are privately owned andmarkets and prices are used to direct and coordinate economic activites.

a measure of average output or real output per unit of input. labor divided byu real output of hours and work