Econ 101 Lecture 1-4

Limited natuer of society's resources

Rates of increasing prices and the devaluing of currency

Rates of decreasing prices

How much a country's economy is prodcuiong

How economic pie is split up

Assisting one group at the cost of harming another group

Lost of potential gain

Costs that have already been incured and should not be considered

Marginal benefits and costs weighed to make a decision

Additional benefits (incremental) when maing a decision

Additional costs. Cost connected in addition to goods/service

Comparing the benefits and costs of a decision and deciding ot make it or not

Something that induces a person to act

Byproduct from doing something

Positive byproduct from doing somethig

Negative byproduct from doing something

Allows people to specialize in an activity the individual does best

-Give up something that is produced in exchange for something else that cannot be produced or easily obtained

Free trade allows for diverse products that consumers can purchase

Market in which the government has complete and total control over all decisions made of the economy

Allows reources to be moved freely through an economy through prices or exchange of trade

There is no cordination between producers and consumers. The invisible hand guides resources through the economy

They are there for the protection of the people.

Ability of individual to own and exercise control over scarce resource

Ability for a individual to file with the government and it says that the individual ahs right over a patent and no one can copy the idea or design

When market is left on its own, it fails to allocate resources accordingly so the government has to step in to allocate it properly

Ability of single economic actor or small group of actors to have substantial influence on market prices

One or few firms have control over the market. This causes overpricing and inefficient reosource distribution

When a group or individual has complete and total control over a reosource and coordinates the price of that resource

GDP

Measures the average price consumers pay over time for goods

More moeny is being printed

More of a resource means it is less valuable. This applies to money

Oversees federal laws of labor in the US

Inflation is through the roof (Vlaue of the currency is so low)

1.) Increase/Decrease government spending (Change in government spending)
2.) Increase/Decrease taxes (Change in amount of taxes)
3.) Increase/Decrease money that is printed (Changes amount of money printed)

Flucuation of economic acitviity like production and unemployment

One change of a variable holds the other variables constant

Asks how does a market work.
Focus more on individual human behavior

Asks how does the economy work
Observation of collective human behavior on a large scale

Producer price index always comes first.

Advises the president on economic forecasts and plicies in foriegn or domestic issues.

Implement the president's and staff's vision across the executive branch

Houses all gold and other stuff.

Oversees federal laws of labor in the US

Handles criminal prosectuations and lawsuits in the US and looks at crime reports and analyzes them

Produce independent analysis of budgetary and economic issues to support economic process

Central bank of the US and conducts monteary policy in the US

Dismal Science

Help simplify world aorund us and identify relationship between variables quickly

Guesses that help simplfiy complex world and used in Economic models

Two decision makers - Firms and households

For goods and services

Diversification and efficiency
Lower opprotunity cost
Specialization

Individual or country can produce more with fewer resources than other trading partner
Country or person can have absolute advantage in both goods that is being traded

Circumstance that puts on in a favorable position

Measures trade off between two goods each producer faces
(What must be givne up to obtain something)

Anaalze and specialize. Country or individual cannot have comparative advantage in both goods.
Individual or country that can produce a good at a lower opprotunity cost

Specialize according to comparative advantage

Total production fo economy rises (everyone within economy is better off)
In order to trade, there has to be benefits

1.) Machinery
3.) Vehicles
4.) Fuel( oil)
5.) Pharmaceuticals

1.) Pharmaceuticals
2.) Oil
3.) Industrial Machines

Buyser snad sellers coming together to exhcange goods/services
Buyers determine the demand for the product
Sellers determine the supply of the prodcut

Buyers and sellers in exact samåe room and exact same time buying and selling goods

Sepeared locations selling and buying but all locations contirbute to overall market

Factors that prevent new firms from entering the market

To serve alcohol at a restuarant, you must obtain an alcohol permit from department of alcohol and beverage control

Amazon has large shipping infrastructure, direct competetion to amazon is a barrier to entry because they have such large infrastructure and therefore the advantage

Forces that make market economies work. Refers to behavior that people use when they interafct with one another in markets

1.) Market where there are many buyers and many sellers
2.) Both buyers and sellers have negligible impact on prices
3.) Price and quanity determined by both buyers and sellers

No one has complete control over price of market goods (Price Takers)

One seller, one good, control over price

Small group of sellers that control prices

Many firms trying to get consumers to buy their good over their competitors

Willingness and ability of buyers to buy different quanitites of a good
Relationship between price of a good and quanity demanded of a good (How much is demanded)

Number of units of a good that individuals are willing and able to buy at a price

Price rise, demand of qunaity for good falls
Price falls, more is consumed and demanded

Words
Symbols
Demand Schedule
Demand Curve

Table givign data points

Downward sloping price
Take demand scheudle and turn into demand curve
Price decrease, quanity demand increases

All individual demand curves in a market added up to make market demand curve
Total quanity of goods varies between individual demand curves
Quanity on X axis | Price on Y axis ALWAYS

Movmement on the demand curve form one point to another caused by a change in the price of a good or service

Shift in demand curve (When entire demand curve shfits left or right; overall quanity demand change at every single price)

How much money someone makes influences the choices someone makes when making purchases in the market

Good when demand rises as income increases | Income decreases, demand decrease

Income increases, demand decreases

Income increase/ decrease , Demand has no change

Two goods used in conjunction (consumes both goods jointly)
If price fo good X increase, Price of good Y Decreases
Increase in good leads to increase to overall demand of second good
One curve affects the other good curve

Two goods satisfy same or similar needs
If price of good X increase, Demand for good Y increase

As number of buyers increase, demand for good X incrase

Expected increase in income leads to increase in current demand and spending

WIllingness and ability for sellers to produce and offer to sell different quanities of goods at difference prices

Number of units of a good that suppliers are willing to supply

As price of good increase, quanity supply increases as well
As price decreases, quanity supply decreases as well

Summation of individual supply curves
All demand curves in a market added up
Higher price is an incentive for producers to produce more
Lower price is an incentive for consumers to consume more

Move ment on supply curve from a price change
Price Increase = Quanity Supply Increase
Price Decrease = Quanity supply decrease

Shift in supply Curve
Increase in Supply = Rightward shift
Decrease in supply = Leftward shift

Input prices increase ; overall supply decrease
Supply and input prices are inversely related
EX: Increas ein jet fuel causes increase in air fare

Always leads to higher supply on market
Supply and technology are positively related

Decrease current supply if prices are rising in the future

When number of sellers in market increases supply increases as well

Qunaity that corresponds to the equilibrium price, when supply and demand curve intersect.
Amount that consumers are consuming at the EQ price

EQuilibrium price meets equilibrium quanity, also known as market clearing price

Everything sold in the market is bought at that price

Market at rest and is in balance
When consumers are happiest and sellers are happiest because suppliers do not have extra product and consumers do not want to consume more

Excess Supply, surplus on the market
Quanity supplied > Quanity Demanded
Occurs only at prices above P* (EQ Price)

Suppliers are trying to get rid of extra product

Excess demand
Quanity demanded > Quanity Supplied
Occurs only at prices below P*

Suppliers cannot meet demand so they rise prices to decrease demand

Shift demand curve to right (Quanity increase, Price increase)

Shift supply curve to left (Quanity decrease, Prince increase)

Shift both curves to right (Quanity increase, Price Same)

Demand curve shift left, supply curve right (Quanity Same, Price Decrease)