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What is Economics?
- The social science that studies the allocation of scare resources for the creation, distribution and consumption of goods and services
- (*Note: this is the first essay question on the 1st exam and the last question on the final exam)
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Who is Paul Samualson?
The first Noble Prize winning economist.
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What does Miller believe?
That the social science that studies the allocation of scarce resources for the satisfaction of insatiability of human wants.
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Will the rational consumer ever be satisfied?
NO
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What is Macroeconomics?
The study of the economy in total or aggregate ie. aggregate supply or aggregate demand, national income, unemployment inflation, business cycle theory, % & banking, mandatory physical policy, etc...
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What is Microeconomics?
The study of the firm and its environment.
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What is Business Management?
The study of how to make the firm more efficient and thus more profitable.
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What are the 5 Factors of Production of resources?
Hint: Looks Like Certain Enjoyment Today
- Land:
- Labor:
- Capital:
- Entrepreneur:
- Technology
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What is Land as it pertains to econ?
not only includes arable land, but resources found above and below the surface
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What is Labor as it pertains to Econ?
- 1. the labor participation rate divides all those 16 and over in the population into the number in the labor force times 100%
- 2. the labor force of this nation includes - all those 16 and older seeking employment as well as those who are employed
- 3. the return to labor is either wages or salaries
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What is Capital as it pertains to Econ?
- 1. the capital stock of this nation includes it: Plants, Equipment, & Machines and is distinguished from the other factors of production and is person made and is distributed
- 2. the return to capital is interest
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What is Entrepreneur as it pertains to Econ?
the persons or person who combine the other factors of production together for the purpose of making a profit or suffering a loss
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What is Technology as it pertains to Econ?
- 1. innovation, ie., it is producing more with the same given inputs of the factors of production
- 2. the return to technology is a higher standard of living for society
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What are the Laws of diminishing returns?
*Note: this would make an outstanding test question...*
- -the law states the continuous increases of one input factor while holding the other input factors fixed will lead to a decrease in the per unit output of a variable input factor
- 1. the law of increasing relative cost: the law states that each item produced in a line cost more then the previous item produced
- 2. the law of diminishing marginal utility
- a. utility is satisfaction received from the item consumed
- b. marginal utility is the addition satisfaction conceived from the items consumed
- c. the law of diminishing marginal utility states that each item consumed in a line provides less satisfaction then the previous item consume
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What is Supply as it pertains to Supply and Demand?
a relationship between various quantities of goods and services producers are willing and able to produce at various prices
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Supply and Demand:
What is Supply Schedule?
a locus of points each giving the minimum price that will bring forth a give quantity of a good or service per unit of time
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Supply and Demand
What is the law of supply?
- producers or willing and able to produce more goods and services at higher prices
- (total revenue = price x quantity)
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Supply and Demand
What is a Supply curve?
a locus of points each giving the minimum price that will bring forth a given quantity of a good or service per unit in time
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Supply and Demand
What are six non-price determinants that cause shifts in supply
Note: there is a difference between a change in supply and a change in quantity supply. a change in quantity supply is a movement up or down the existing supply curve, where as a change in supply shifts the entire supply curve to the right or to the left and is non-price determent
- 1. Technology
- 2. Factor Cost
- 3. Opportunity Cost
- 4. Taxes and Subsidies
- 5. Expectations
- 6. Number and Size of producers in the market
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Six non-price determinants that cause shifts in supply
Technology shifts...?
- Positive to the right
- Negative to the left
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Six non-price determinants that cause shifts in supply
What is Factor Cost?
- 1. rent, wages, salaries, interest, etc
- 2. rising factor cost shift the supply curve to the left
- 3. falling factor cost shift the supply curve to the right
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Six non-price determinants that cause shifts in supply
Is Opportunity cost: non-profitable or profitability?
Profitability
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Six non-price determinants that cause shifts in supply
What are Taxes and Subsidies?
- Taxes: shift the supply curve to the left
- Subsidies: shift the supply curve to the right
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Six non-price determinants that cause shifts in supply
Expectations shifts positive / negative in which directions?
- Positive to the right
- Negative to the left
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Six non-price determinants that cause shifts in supply
Number and size of producers in the market shifts positive / negative in which directions?
- Positive to the right
- Negative to the left
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