A new technology that reduces the time a product is made is always a great
The classical economists believed in free markets and that the economy would always
achieve full employment through forces of demand and supply. If there were more people
seeking work than the number of jobs available, wages would fall until all those see
Aggregate hours (billions)
Real GDP (billions of 2010 dollars)
Calculate the growth rate of real GDP in 2011.
Growth Rate of real GDP = Real GDP (current year) Real GDP (previous year)
_ x 100
Real GDP (previous year
What economic factors are taken into account when measuring GDP?
GDP measures annual economic output the total value of new goods and services
produced within a countrys borders.
What makes GDP an effective measure of living standards?
GDP gives informati
A negative externality is a spillover of an economic transaction that negatively impacts a party
that is not directly involved in the transaction.
There are two types of negative externalities:
1) Negative Production Externality - when a firm's production
A price ceiling occurs when the government puts a legal limit on how high the price of a
product can be. In order for a price ceiling to be effective, it must be set below the natural market
equilibrium. Price controls keep the prices closer to usual leve
Think about the market for retail gasoline, a market of perfect competition. What are the
key characteristics of perfect competition?
(1) a large number of small firms,
(2) identical products sold by all firms,
(3) perfect resource mobility or the freedom
Computers are something that has many brands, and they are always changing to stay up with the
newest technology coming out. Computers used to only be available as desk tops, and then they
came out with the laptops, or portable computers, when you walk in
State for each of the following items whether you judge it to be included or excluded in GDP.
State whether each included item falls under consumption, investment, government expenditure,
or net exports.
The purchase of copy paper by Intel for the compan
A monopoly is a market with only one seller and no close substitutes for the product or
service that the seller is providing. Since the single seller is the only source of the particular
product or service, they have the ability to charge whatever price t
The four key characteristics of perfect competition are: a large number of small firms,
identical products sold by all firms, perfect resource mobility or the freedom of entry into and
exit out of the industry, and perfect knowledge of prices and technolo
The Unites States on the Production possibility frontier.
The production possibility frontier represents the point where an economy is most
efficiently producing its goods and services, and therefore using its resources i
Price Elasticity of demand for gasoline=
(Percent change in quantity demanded Percent change in price)
(800,000 1,000,000 (800,000 + 1,000,000) 2) x 100) (4-3) 3) x 100) = - 0.76
Price Elasticity of supply for gasoline=
(Percent change in quantity supplie
The Federal Reserve responded aggressively to the financial crisis that emerged in the
summer of 2007, including the implementation of a number of programs designed to support the
liquidity of financial institutions and foster improved conditions in finan
Lawns cut per day ( Total Product)
Total variable cost is the cost of a firms variable factor of production or labor. Total cost is the
cost of all the factors of production used by the firm. Total
The Great Financial Crisis of 2007-2009 was the most severe (financial) crisis in the
post-war era. The 2008-2009 recession was long and deep, and according to several indicators
was the most severe economic contraction since the 1930s (but still much les
Command-allocates resources by the order of someone in authority
In a command system quantity demanded, equilibrium price, and quantity supplied would
all be low, the demand for the product would only be what is needed so the supplied
amount would be the
The price of a commodity in the market is determined by the interaction of the forces of
demand and supply. Demand for a commodity at a given price is means the total quantity of that
commodity which buyers will take at different prices. Supply of a commo
According to the graph above, if the students union set the minimum wage for private
math tutors at $5.50 per hour there would be 275 tutors employed at $5.50 an hour.
If the raised taxes on educational materials, and making operation co