200 FN

  1. law of diminishing marginal utility
    • enjoy something less the more you get of it
    • => a series of milkshakes
  2. how do consumers maximize total utility
    • by considering their utility from each good, the price of each good, and their budget
    • MUa/Pa=MUb/Pb --> marginal utility over price
  3. sunk costs
    costs you can't recover
  4. price elasticity of demand
    • the responsiveness of the quantity demanded to the change in price
    • higher meaning larger negative numberĀ 
    • high: sports tickets for a bad team
    • low: sugar
  5. short run vs. long run
    • short: the period of time in which you can change at least one input
    • long: when you can change all the inputs
  6. US unemployment
    6.7% as of april
  7. CA unemployment
    8.1% as of april
  8. US GDP
    • $50k per capita
    • $17 trillion (2013 estimate)
    • Y = C+I+G+Nx
    • real GDP takes inflation into account => nominal growth in GDP - some measure of inflation = real GDP
  9. marginal cost
    • the cost for producing one additional unit
    • usually U-shaped (parabola)
    • a little bit of help helps but a lot of help makes it harder (think pizza parlor)
  10. average cost
    • average of all costs
    • usually U-shaped
  11. economies of scales
    • situation where the firm's long run average costs fall as it increases the quantity it makes
    • the cost advantage that arises with increased output of a product
  12. perfectly competitive market
    • many buyers and sellers; all firms selling identical products; low barriers to entry
    • example: market for apples the fruit
    • demand curve is a straight line for a firm in a p.c. market
  13. price of gas
    • WTI $101/barrel
    • recent peak $140/barrel in 2008
    • during recession was $40/barrel
    • very volatile; reflects overall world economic activity
  14. DJ industrial avg
    • 16,000
    • 30 companies
  15. profit
    • total rev-total cost
    • includes implicit costs
  16. productive efficiency
    occurs when economy is using all its resources efficiently
  17. circular flow diagram
    • circular flow of money from households to businesses/firmsĀ 
    • see slides in chapter 12
  18. shortcomings for GDP
    • doesn't measure households
    • not adjusted for pollutions
    • crime isn't counted
    • says it grew but doesn't say whether it grew for everyone
  19. what fraction of income is wages
    about half
  20. labor force
    • people with jobs and those who have looked in the last 4 weeks
    • teenagers count
    • housewives don't count
  21. level of unemployment that's considered "full"
  22. frictional unemployment
    type of unemployment when you're trying to match a certain person up with a certain type of job
  23. structurally unemployed
    when you don't have the skill set required by the job
  24. yield curve
    • unbelievably low
    • goes from 0 to 347 basis points so it's steep by historical standards
    • avg yield curve goes up 200 basis points
  25. fed funds intended rate
    • between 0-25 basis points (0-0.25%)
    • 2% inflation is "healthy"
    • current CPI is 0.2% per month, 2.4% per year
  26. efficiency wages
    a bonus you're paid for higher productivity
Card Set
200 FN