Economics Chapter 2 Chapter 2 * Opportunity cost is a ratio. It is the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good as we move along the production possibilities frontier. * The outward-bowed shape of the PPF reflects increasing opportunity cost. The PPF is bowed outward because resources are not all equally productive in all activities. * When goods and services are produced at the lowest possible cost and in the
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2008 Public finance Public finance is known as public sector economics or public economics focus on the taxing and spending activities of government and their influence on the allocation of resources and distribution of income. Public finance is the study of the role of the government in the economy. It is the branch of economics which evaluate the government revenue and government expenditure of the public authorities and the modification of one or the other to achieve desirable effects and
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outcomes 23 / Creative destruction 36 / Tax & govt program disincentives 38 Chapter 3: Government and the Economy • In your own words‚ explain what an externality is. • Besides addressing externalities‚ what other important and beneficial roles does government play in our market economy? Externalities 43 / Govt solutions to externalities 48 / Govt makes market economy possible – rights‚ laws / regulations 51 / Public goods 57 / Redistribution 59 Chapter 4: Government and the Economy
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Question 3 Perfect Competition and Monopoly (a) I. Explain perfect competition and monopoly market structures‚ and identify the key factors that distinguish them. Perfect Competition Market In economic theory‚ the perfect competition is a market form in which no producer or consumer has the power to influence prices in the market. According to the website wordIQ.com‚ in order to classify the market is a perfect competition market‚ the market must match below criteria: 1. There
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Matthew McDowell Assuming there is pure competition in the market place‚ and no government intervention‚ we are able to focus on how the price mechanism determines the equilibrium price in the market. Markets can be effective at resolving the basic issues of what and how much to produce at a certain price level although left to operate on its own‚ the market can still create unsatisfactory outcomes. When markets do not produce the desired outcome‚ it is known as market failure and when this occurs
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role in the housing industry along with all other industries. There are several factors that can influence the housing industry economically. Supply and demand coupled with price elasticity can affect the housing industry. Negative and positive externalities‚ wage inequality‚ and the monetary and fiscal policies can all have substantial affect the industry of new homes. It must also be determined exactly how the economy affects the industry in both positive and negative ways. Price Elasticity The
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good is to changes in other economic variables Elastic supply: supply of a good or service that increases or decreases as the price of an item goes down or up. Equilibrium price: the amount demanded exactly meets demand supplied. Externalities: Costs and benefits not reflected in free market prices. Costs or benefits on others who are not responsible for initiating the effect Income elasticity Indirect tax: A tax that increases the price of a good so that consumers are actually paying
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AS Microeconomics Revision Booklet Micro-Economics Definitions THE ECONOMIC PROBLEM Economic Term | Definition | Opportunity Cost | The real cost of a good/service in terms of the next best alternative foregone. | Economic goods | Goods which have an opportunity cost. | Free goods | Goods which don’t have an opportunity cost. | Normative statements | Based on opinion‚ have some valued judgments. | Positive statements | Value-free‚ objective‚ based upon testable theories‚ fact. |
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Economics Exam Notes Micro Economics DEMAND The nature of markets • A market is where buyers and sellers come together to carry out an economic transaction The law of demand • The law of demand states that “as the price of a product falls‚ the quantity demanded of the product will usually increase‚ ceteris paribus” o Ceteris paribus is an assumption that means “all other things being equal” The demand curve The non-price determinants of demand • There are many factors that determine
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social issues may affect citizens’ happiness such as unemployment and income inequality. GDP cannot reflect positive or negative externalities involve in the consumption and production but these externalities do affect on people’s living standard. Negative externalities such as pollution brings environmental costs to society but not calculated by GDP. Positive externalities such as technological advance benefits to society but it is not count in GDP. Economic well-being would be under-value or over-value
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