ECON 152 Class Notes

ECON 152 Class Notes - Introduction(p 9 Economics the study...

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Unformatted text preview: 2/9/2007 Introduction (p 9) Economics- the study of societies production and distribution of goods and services. It focuses on why we choose to use our scarce resources the way we do and what are the consequences of these choices Microeconomics- focuses on the individual parts of the economy. The analysis is usu- ally of a single product or of groups of people acting with a common economic purpose (buyers of a particular good or suppliers of a good or service. We use the model of sup- ply and demand to understand how market equilibrium prices and quantities are deter- mined Market- anything that facilitates the voluntary exchange of goods and services among individuals. A place or way for individuals to exchange at some established price goods and services Macroeconomics- Looks not at any particular part of the economy, but rather at the economy as a whole. We aggregate the microeconomic parts to come up with a n overall picture. Macroeconomics has many micro counterparts. For example, rather tan be concerned with the price of any one good , we study the level or average of all prices in the economy. Rather tan focus on the market equilibrium qty of a single good, macroeconomics is concerned with the total output of all goods and services ========== Macroeconomics addresses the following questions 1. Why have we seen the increase in the total output over time? 2. Why is there an uneven path? 3. What has happened to prices during this period? 4. What during this period has happened to employment? Review of Microeconomics (p 11) Demand- the relationship between the price of a good and the desired rate of purchase, ceteris paribis. Other things the same, how many units of a good are people able and willing to buy at different prices. Demand does not refer to just out wants (we know that our wants are unlimited), rather it deals with the specic quantities of a good that people are actually willing to purchase at different prices. This relationship assumes that prices play an important role in our buying decisions. The observed relationship between prices and consumer purchase is formulated in an important economic law- the law of demand Law of demand- the higher the price of a good, the lower the desired rate of purchase, ceteris paribis. Alternatively, there is an inverse relationship between the price of a good and the quantity demanded. The demand curve is downward sloping because a higher price raises the opportunity cost of consuming or doing something. When something has a higher opportunity cost, individuals seek substitutes that satisfy their wants and needs at a lower cost Opportunity cost- what one has to give up in order to have or do something. The high- est valued alternative that is not available to the individual because he/she chooses to use a resource in a particular way....
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This note was uploaded on 04/17/2008 for the course ECON 152 taught by Professor Harris during the Fall '08 term at University of Delaware.

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ECON 152 Class Notes - Introduction(p 9 Economics the study...

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