January 22, 2017

1 cycle is Trough to Trough 

Average cycle is 5 to 7 years 

Recessions last about 14 months 

Peaks and troughs are meaningless because we never know we are in one until its over 

Trough means end of reccesion 

It a recession loses in are them 10% of real GDP then, its a depression 

January 20, 2017

Supply and demand
Equilibrium it is a past at which the supply and the demand curve intersect

Excess demand occur when QD > QS greater than quantity supply

Excess demand result in a shortage is where consumers can't get the quanity of the items that they desire   

Price ceiling create a shortage when the goverment sets a legal limit on how high the price of a product can be in order for price willing to be effective it must be below equlibrum

Excess supply QS>QD this is QS is greater than QD

Surplus producers have inventory, where they can't get rid of price floor

Price floor lowest legal price can be sold at used by the government to prevent prices from becoming to low

Example: minimum wage

January 5, 2017

Production Possibilities Graph shows an alternative way to show economy resources the line of the PPG the frontier

Efficiency is using resources in such a way to maximize the production of goods and services leads into increase profit 

Under utilization - opposite efficiency using fewer reason than economy is capable of using into decrease profit 

Part A- equally produce both attainable efficent  

Part B- attainable but inefficient under utilization unemployment/under employment of resources 

• famine/shortage food 
• war
• recession   

Part C unattainable. using the current resources 

Technology ecumenic growth 

Key assumpations 

1.  only 2 goods can be produced 

2. full employment of resoruces  

3. Fixed resources (factors of production) 

Three types of movement that occur with the PPC 

Inside the PPC 

Along the PPC 

Shifts of the PPC  

 When resources are shifted from making good or service to another the cost of producing the second and item increase. 

Elasticity of demand is measure of the consumer reaction to change in price 

Elastic demand - a demand that is very sensitive to change in price

• product is not a necessity 
• there are available substitutes  

E > 1  Example 1. Soda 2. Steak 3. Fur coat 

Inelastic demand is that is not very sensitive to a change in price 

• product is a necessity 
• no substitues 

E < 1 example: 1. gas 2. insulin

Unitary Elastic E=1

PED 

Step 1: Quantity New Quantity - Old Quantity/ Old Quantity 

Step 2: New price - Old price/ Old price 

Step 3: % 🔼 in quantity/ %🔼 in price = PED

Total revenue - total amount a firm recieves from selling goods and services  PXQ=TR  

TFC + TVC = TC

AFC + AVC = ATC

TFC/Q=AFC

TVC/Q=AVC

TFC=AFC X Q

TVC=AVC X Q

Marginal Cost 

New TC - Old TC = Marginal Cost 

January 4, 2017

Factors of Production
1. Land- natural resoruces
2. Labor- work exerted
3. Capital
                 -Humans Capital is people acquire skills and knwolegde threw experience and education
                 -Physical Capital is money, tools, building, equipment, machinery
4. Entrepreneurship - innovative, risk taker,

Trade offs- a scarifice when we make a decsion  

Opportunity cost - most desirable alternative given up as a result of a decision
Guns or butter - refers to trade offs that nation face when choosing whether to produce more or less military or consumer goods

Thinking at the margins is deciding whether to add or subtract one additional unit of some resource

Jan 3, 2017

Macroeconomics is a study of the economy as a whole "the big picture"

VS

Microeconomics is the study of individual or specific unit of the economy decisions that household make and how they interact in the market


Postive Economics

• Claims - an attempt to describe world as is
• descriptive in nature
• based in facts              

                  VS

Normative Economics 

• Claims - that attempt to prescribe how the world should be 
• Option based   

Needs is basic requirements for suvrival     VS  Wants (Desire) 

Scarcity Fundamental 

economic problem all society face "how to satisfy unlimited wants with limited  resources."

VS

Shortage 

Quantity demand is greater than quantity supply QD>QS

Goods
Tangible condiments (touch, hold) sold bought, traded, produce
consumer good- goods that are intended for final use 

capital goods- items used in the creation of other goals
                                      VS
Services 
work is that performed for someone  example: concert, barbershop