Micro Study Guide - Microeconomics Final Study Guide Good A...

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Yes Excludable No Prof. Frasc was born in Chico, California Microeconomics Final Study Guide Good- A desirable commodity or service A good is scarce if at zero price, more of the good is desired than is made available. Opportunity Cost of an action is the best foregone alternative to that action An outcome is efficient if there is no waste An outcome is equitable if it is fair Factors of Production (inputs) are goods used to produce output 1. Labor 2. Capital 3. Materials Production Possibilities Frontier(PPF) - Lists all possible combinations of output given full employment of all inputs Marginal (one more)- Opportunity cost of the first unit -A producer has the absolute advantage in production if it can produce the good in less time with fewer inputs -A producer has the comparative advantage in production if it can produce the goal at the lowest cost -Comparative advantage decides who should be doing it Chapter 4 Market is any forum in which buyers and sellers can interact Competitive Market is a market with many small buyers and sellers, each with no ability to influence price Law of Demand states that as price increases quantity demanded decreases Law of Supply states that as price increases, quantity supplied increases -A change in quantity demanded (supplied) is a movement along the demand(supply) curve -A change in demand (supply) is a shift in the curve itself caused by something other than the price of the good (Refer to graphs) Factors that change demand: 1. Income 2. Perception of the good 3. Prices of related goods 4. Changes in needs, desires 5. Climate 6. Expected future prices
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Microeconomics Final Study Guide Inferior Good - Thought less of, lower quality, lower price Normal Good -A good whose demand increases as income increases Factors that affect supply : 1. Costs of inputs 2. Production technology 3. Natural disasters 4. Number of Firms Market Demand is simply the horizontal sum of all individual demands Chapter 5 Price elasticity of demand ( Ep) - % Qd % P Factors that affect elasticity of demand 1. Necessity of the good 2. Availability of substitutes 3.
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