Unit 1

January 20

• Equilibrium- is the point at which the supply curve and the demand curve intersect
• Excess Demand- it occurs when quantity demanded is greater than quantity supplied
• Results in a shortage
• Shortage- This is where consumers can't get enough of the quantities they desire
• Price Ceiling- it occurs when the government puts a legal limit on how high the price of a product can be.
• creates a shortage 
• is always below the equilibrium
• Ex. The government sets a price ceiling for a flu shot
• Ex. Rent control
• Excess Supply- It occurs when quantity supplied is greater than quantity demanded
• Price floor- It is the lowest legal price a commendity can be sold at
• They are used by the government to prevent prices from becoming too low
• Ex. Minimum wage

Unit 1

January 17

Total Revenue

P*Q (Price * Quantity)

• Marginal Revenue- The additional income from the sale of an additional product
• Fixed cost- A cost that doesn't chnage no matter how much of a good is produced
• Ex. Mortgage, salary
• Variable cost- A cost that rises or falls depending upon how much is produced
• Ex. Electricity

Unit 1

January 12

Calculating Elastic Demand

1. Quantity: New quantity- old quantity ➗ old quantity
2. Price: New price - Old Price ➗ Old Price
3. PED: % Change in Quantity ➗ % change in Price

Unit 1

January 11

• Elasticity of Demand- A measure of how people react to a price in demand
• Elastic Demand- Demand that is very sensitive to a change in price
• Products is not a necessity
• Available substitute
• Examples
• Sodas
• Fur Coat
• Pizza
• it is always greater than one
• Inelastic Demand- it is not very sensitive to a change in price 
• Product is a necessity 
• few or no substitution
• Example
• Gas
• Salt
• Insulin
• it's always less than one 
• Unitary Elastic- Its is equal to one

Unit 1

January 6

Two Types of Efficiency

• Productive Efficiency
• Products are being produced in least costly way.
• This is any point on the production possibilities curve
• Allocative Efficiency
• The products being produced are the ones most desired by society
• This optimal point on the PPC depends on the desires of society

Unit 1

January 5

• Thinking at the margins- Deciding whether to add or subtract one additional unit of some resource.
• Productive possibility graph- It shows alternative ways to use an economics resource
• the line on the PPG is known as the frontier or curve.
• when producing at the frontier efficiency occurs 
• when producing benet the frontier under utilization occurs.
• Efficiency- Using all resources in such a way to maximize the production of goods and services
• Efficiency increases profits
• Utilization- Opposite of efficiency 
• using fewer resources that an economy is capable of using
• leds to a decrease in profits
• Point A- Attainable and Efficient ( On the curve)
• Point B- Attainable and Inefficient/Underutilization Unemployment or Underemployment (Inside the Curve)
• Point C- (Outside the curve)

4 Key assumption

1. Only 2 goods can be produced
2. Full employment of resources
3. Fixed resources (Factors of Production)
4. Fixed technology

Three Types of Movement that Occur Within The PPC

1. Inside the PPC
2. Along the PPC
3. Shift of the PPC

Unit 1

January 4

• Goods- Than-gable commodities 
• Consumer goods- goods intended for final use by consumer
• Capital goods- Items used in the creation of other goods
• Services- Work performed for someone

Factors of Production

• Land- Natural resources
• Labor- Work exerted
• Capital
• Human Capital- People acquire skill and knowledge through experience and education
• Physical Capital- Money, tools, buildings, and machines
• Entrepreneurship- Involves risk taking, combine the factors of production in order to be successful
• Trade off- An alternative that we sacrifice when we make a decisions.
• Opportunity Cost- Next best alternative
• Guns or Butter- Trade off that the government face when choosing whether to produce more or less military goods or consumer goods. 

Unit 1

 January 3

Basic Concepts of Economics

• Macroeconomics- The study of the economy as a whole
• Microeconomics- The study of individual or specific units of the economy.
• Supply and Demand
• Business Organization
• Positive economics- Claims that attempt to describe the word as is 
• collects and presents facts 
• Very descriptive  
• Normative economics- Claims that attempt to prescribe how the world should be.
• Needs- Basic requirements for survival
• Wants- Desires 
• Scarcity- The fundamental economic problems that all societies face
• How the satisfy unlimited wants with limited resource
• Shortage- Situation in which quantity demanded is greater than quantity supplied.