EGC1 Full Study Guide
Economics
Ch.1 Limits, Alternatives, Choices:
Opportunity costs: to obtain more of one thing, society forgoes the opportunity of getting the next best thing. That sacrifice is the opportunity cost of the choice.
Microeconomics: the part of economics concerned with decision making by individual customers, workers, households, and business firms.
Macroeconomics: examines either the economy as a whole or its basic subdivisions, such as govt, household of business sector.
Economic Resources: land, labor, capital, entrepreneurial ability.
Optimal BEST point on production curve is where marginal benefit MB equal its marginal cost MC.
The economic perspective stresses:
Resource scarcity and the necessity of making choices
The assumption of purposeful or rational behavior
Comparisons of marginal benefit and marginal cost
Economic Principles:
Generalizations
Other things equal assumption
Graphical expressions
Ch. 3: Demand, Supply & Market Equilibrium.
Demand: buyers plans. schedule or curve (downward) that shows the amounts of a product that consumers are willing and able to purchase (at a series of prices, during a specified period of time).
Law of Demand: other things equal, price falls the quantity demanded rises, as price rises demand falls. (Negative inverse relationship)
Diminishing marginal utility: consumers will buy additional units only if the price of those units is progressively reduced, each additional purchase will yield less satisfaction to the customer than the first.
Income effect: lower price increases the purchasing power of buyers, lower price & buyer will/can buy more.
Substitution effect: at a lower price buyers have the incentive to substitute what is now, less expensive product for other products relatively more expensive.
Determinants of demand (when change the curve will shift L or R): consumers tastes, number of buyers in market, consumers incomes, prices of related goods, consumer expectations.
Change in demand:
Ch.1 Limits, Alternatives, Choices:
Opportunity costs: to obtain more of one thing, society forgoes the opportunity of getting the next best thing. That sacrifice is the opportunity cost of the choice.
Microeconomics: the part of economics concerned with decision making by individual customers, workers, households, and business firms.
Macroeconomics: examines either the economy as a whole or its basic subdivisions, such as govt, household of business sector.
Economic Resources: land, labor, capital, entrepreneurial ability.
Optimal BEST point on production curve is where marginal benefit MB equal its marginal cost MC.
The economic perspective stresses:
Resource scarcity and the necessity of making choices
The assumption of purposeful or rational behavior
Comparisons of marginal benefit and marginal cost
Economic Principles:
Generalizations
Other things equal assumption
Graphical expressions
Ch. 3: Demand, Supply & Market Equilibrium.
Demand: buyers plans. schedule or curve (downward) that shows the amounts of a product that consumers are willing and able to purchase (at a series of prices, during a specified period of time).
Law of Demand: other things equal, price falls the quantity demanded rises, as price rises demand falls. (Negative inverse relationship)
Diminishing marginal utility: consumers will buy additional units only if the price of those units is progressively reduced, each additional purchase will yield less satisfaction to the customer than the first.
Income effect: lower price increases the purchasing power of buyers, lower price & buyer will/can buy more.
Substitution effect: at a lower price buyers have the incentive to substitute what is now, less expensive product for other products relatively more expensive.
Determinants of demand (when change the curve will shift L or R): consumers tastes, number of buyers in market, consumers incomes, prices of related goods, consumer expectations.
Change in demand: