Midterm Study Guide - Midterm Study Guide Module 1 Resources are scarce Four types of resources land labor capital and entrepreneurship Opportunity cost

Midterm Study Guide - Midterm Study Guide Module 1...

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Midterm Study Guide Module 1 Resources are scarce Four types of resources: land, labor, capital, and entrepreneurship Opportunity cost: the next best thing forgone Positive economics is fact based and normative economics is opinion based Module 2 Business cycle; has depressions and recessions and expansions Unemployment rate = percentage of the labor force that is unemployed Economic Growth = increase in RGDP per year Module 3 PPC = Productions Possibility Curve (trade offs) PPC Graph = Quantity of item 1 vs Quantity of item 2 opportunity cost = slope of PPC PPC shifts outward (economic growth) - more resources and technology Module 4 Comparative advantage = who has less of an opportunity cost Absolute advantage = who produces more Trade is based on comparative advantage Producer A Producer B Product 1 15 10 Product 2 60 60 opportunity cost of each product: put the other product as the numerator so, opportunity cost of Product 1 in Country A is 60/15 = 4 (make sure chart is in this format) Module 5 Supply and Demand = basic macro/ micro concept Demand Curve- the only thing that causes movement along the demand curve is a change in price Shifts of the Demand Curve- changes in prices of related goods, changes in income, changes in tastes, changes in expectations, changes in number of consumers Module 6
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