Supply- from producers point of view; shows costs of production.
Principle of rising marginal cost (cost of a single unit)- all supply curves are upward sloping.
Ex 1: How do we get market supply from individual supply curves for specific business? Assume
History of heroin market- prior to 1914 opium & heroin were legal; consumed opium in diluted
liquid form; overdoses were uncommon.
Harrison Narcotics Act of 1914- controlled sale of opiates; doctors could only prescribe for
How do we measure wealth/growth? GDP (Gross Domestic Product)
2 Units of measure:
Normal GDP- the dollar value of all new domestically produced final goods & services.
Real GDP- the physical amount of all new, domestically produced final goods &
US central bank- Federal Reserve (The Fed)- a private entity (not part of our govt).
How does government pay for its expenditures?
o Taxes (income for government)
o Print money (get Fed to print money) (must eventually be paid back w/tax $)