Revision Lecture

# Revision Lecture - ECON1001 Revision Lecture Topics 1-12 1...

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1 ECON1001 Revision Lecture Topics 1-12

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2 Final Exam 30 MC (1 mark each) 1 Compulsory Short Answer (10 marks) 1/2 Short Answer (10 marks) Total 50 marks All material examinable Short answer questions from topics not covered in mid-term (i.e. topics 7-12)
3 Gains from Specialisation Lenny can make 2 units of x in an hour, or 3 units of y in an hour Carl can make 4 units of x in an hour, or 8 units of y in an hour

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4 Lenny’s Production Possibilities Curve (PPC) 0 20 40 60 80 100 0 20 40 x y Attainable
5 Carl’s PPC 0 20 40 60 80 100 0 20 40 x y Attainable

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6 Opportunity Costs Lenny’s opportunity cost In 1 hour, Lenny can make 2 units of x or 3 units of y The opportunity cost of 1 unit of x is 1.5 units of y The opportunity cost of 1 unit of y is 2/3 units of x Carl’s opportunity cost In 1 hour, Carl can make 4 units of x or 8 units of y The opportunity cost of 1 unit of x is 2 units of y The opportunity cost of 1 unit of y is 1/2 units of x
7 Scarcity, Choice & Economic Growth Fig 2.5 Consumption Goods Capital Goods Consumption Goods High investment High growth Low investment Low growth

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8 Market Demand for Ice Cream Price Quantity 3.00 1.50 6 12 7 1 2.00 D J D G 19 D M Market demand is the horizontal sum of all individual demands Here: D M = D J + D G More generally: D M = Σ D i 3.50
9 Individual and Market Supply Quantity Price 0.50 1.00 3.00 1 5 8 S E S K 13 S Total

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10 P 1 Q 1 Hot Weather and Ice Cream Fig 3.8 D New S P 0 Q 0 Q P D P P e e
11 P 1 Q 1 Increase in Input Prices Fig 3.9 P P e e D P 0 Q 0 Q P S Old S New

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12 Point Elasticity of Demand: the Derivative Formula Q P dP dQ P dP Q dQ x P P x Q Q P Q = = = = 100 100 % % η . becomes it small very is When . becomes it small very is When dP P dQ Q
13 Inelastic Elastic 0 2 4 6 8 10 12 3 1 2 4 5 6 Quantity (millions of trips per year) Price (dollars per trip) Unit Elasticity Elasticity Along a Straight-Line Demand Curve |η| = |η| = 1 |η| = 0 Q P dP dQ = η

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14 Utility Fig 5.2 0 5 10 15 20 25 30 35 0 1 2 3 4 5 Ice creams per Day Utility Utility ICs 0 1 2 3 4 5 0 11 20 26 30 32
15 Marginal Benefit and the Demand Curve Fig 5.17 0 1 2 3 4 5 6 0 1 2 3 4 5 6 Quantity Demanded  Dollars Q WTP Marg Benefit 0 1 2 3 4 5 \$0.00 \$5.00 \$8.00 \$9.50 \$10.50 \$11.00 - \$5.00 \$3.00 \$1.50 \$1.00 \$0.50

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16 Producer surplus Consumer surplus Quantity (thousands of pizzas per day) 0 5 10 15 20 Price (dollars per pizza) S 5 10 15 20 25 D An Efficient Market for Pizza Marginal cost-- opportunity cost --of pizza Marginal benefit – value – of pizza
Economic profit versus accounting profit Revenue How an economist views a firm Explicit costs Economic profit Implicit opp. costs

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Revision Lecture - ECON1001 Revision Lecture Topics 1-12 1...

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