Econ Study Guide - ;C"r < .~ Econ Study Guide A. Economics:...

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;C " r < . ~ Eco n Study Guide A . Economics : study o f how individuals and societies choose to use the scarce resources that nature and previous generations have provided ; part of behavioral or social science; study of how people make choices lV lacroccoIlomics : regional, na t ion a l , international, f ocuses on long term changes (prices, output, population) and short term changes (output, prices, employment) I Vlic r occo n omics : smallest possible unit, small scale R Ma l thusiall Pop u l atio n Theo r y : the population will grow at a geometric rate while the food supply will gro w at an arithmetic rate , aka there will be poverty in the future . Didn't consider food technology; fixed supply would lead to diminishing returns Po sitive CheeKS: event that we increase mortality rate (disease, war, famine) Preve n t ive Ch e c k s : event that we lower birth rate (abstinence, later marriage) Law o f Dim in i shing R eturns : hold all factors constant and change one, capital stock remains fixed while labor increases, more labor will lead to less production per person added Wh a t gets produced , how does it get produced, and who gets it? . central government either directly sets output targets, incomes, and prices . laissez faire, lack of government involvement , individual pursues self interest without central direction or regulation; buyers and sellers engage in exchange Land, Labor, Capital, Entrepreneurship . graph that shows all combinations of goods and services that can be produced if all society's resources are used efficiently, full resources and full employment at least cost; it is below if it there is unemployment or inefficiency, moves up with more resources or new technology Cost : the value of your next best choice, what you gave up to get what you got by choosing Ij e m and : depends on price of product, income available, amount of accumulated wealth, prices of other products, taste and preferences, and future expectations -change in price=change in quantity demanded -change in a factor=change in demand curve D eman d Cur ve : graph illustrating how much of a product a household would buy at different prices, as price goes up quantity demanded goes down depends on kinds of inputs, amount of each input, and prices of inputs; how much of a product firms will sell at different prices; positive relationship with price and good supplied - co st o f technological advance lowers cost of productions and increases output , increase of output increases cost of production and decreases supply of rdate d p r'utliJ ds : if price of related products goes up, then the supply of the aforementioned product will decrease quantity supplied and quantity demanded are equal , no tendency for change in money K \ '1 a c ro ec OIwmi c s : determinants of total national input, important prices in economy (wage rate) C oncerns: 1. inflation (want low) 2. output growth (want high) 3. unemployment (low) . tool s used by Federal Reserve to control quantity of money in economy
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This note was uploaded on 03/27/2008 for the course ECON 1120 taught by Professor Wissink during the Spring '05 term at Cornell University (Engineering School).

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Econ Study Guide - ;C"r < .~ Econ Study Guide A. Economics:...

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