Chapter_3_corrected

Chapter_3_corrected - Ch.2:Review...

Info iconThis preview shows pages 1–9. Sign up to view the full content.

View Full Document Right Arrow Icon
    Ch. 2: Review Production Possibility Frontier (PPF) Points on PPF represent production efficiency Points inside the PPF are inefficient (wasteful) Points inside and on PPF are attainable Points outside PPF are unattainable Slope of PPF represents opportunity cost (MC)  [e.g.  Study Guide, Pg. 27, No. 3] Efficient Allocation Production efficiency is attained at points on PPF Allocative efficiency: MC = MB  [e.g.]
Background image of page 1

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

View Full DocumentRight Arrow Icon
    Ch. 2: Review Economic Growth Expansion of PPF Tradeoff between current consumption and capital  goods Gains from Trade Comparative Advantage (CA)  Specialization according to CA expands consumption  possibilities beyond PPF  [e.g.]
Background image of page 2
    Ch. 3: Demand and Supply Markets Demand and what determines demand Supply and what determines supply Market Equilibrium
Background image of page 3

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

View Full DocumentRight Arrow Icon
    Markets A market  is any arrangement that enables  buyers and sellers to get information and  do business with each other A competitive market  is a market that has  many buyers and many sellers so no single  buyer or seller can influence the price
Background image of page 4
    Important Definitions:  Price vs. Opportunity Cost Money price The number of dollars that must be given up in exchange for  an object Opportunity cost The highest valued alternative forgone in terms of quantities Relative price The ratio of two prices Measures opportunity cost (e.g.)
Background image of page 5

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

View Full DocumentRight Arrow Icon
    Demand The quantity demanded  of a good or service is the amount that  consumers plan to buy  during a particular time period, and at a  particular price Market Demand Curve aggregation of all individual quantities demanded relationship between price (  ) and quantity demanded ( Q D   ) Quantity demanded  is a number or a value Market Demand  is a relationship
Background image of page 6
6 8 4 2 Q 0 0.50 1.00 1.50 2.00 2.50 3.00 P 10 Figure 3.1 The Demand Curve A B C E D Demand
Background image of page 7

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

View Full DocumentRight Arrow Icon
  The Law of Demand “Other things remaining the same ( ceteris  paribus ), the higher the price of a good, the  smaller is the quantity demanded” Why does the demand curve slope down to the  right? Decreasing willingness-and-ability-to-pay for 
Background image of page 8
Image of page 9
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 32

Chapter_3_corrected - Ch.2:Review...

This preview shows document pages 1 - 9. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online