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

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
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 specific 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
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
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.
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern