Kdkd

Opportunity cost

The value of the best option not chosen

"Nothing is free"

Choosing one thing means giving up another opportunity

Law of supply

Producers make more of a good as the price rises

Price of FSU shirts rises

Quantity supplied rises

Law of demand

If price rises quantity demanded falls

Price of blue jeans rises

Quantity demanded falls

Deadweight loss

Lost surplus from too little too much or wasted output

Wine study shows health benefits

Demand increases

Increase in demand for tea

Quantity supplied increases

Metal becomes cheaper (dishwashers)

Supply shifts right

Hot dog price up and beef price down (hamburgers)

Quantity rises price indeterminate

Cow disease and cereal price drop (milk)

Quantity falls price indeterminate

Elasticity calculation

Elasticity equals 0.25 supply is inelastic

Price ceiling below equilibrium

Shortage and deadweight loss

Tax on consumers of bread

Price falls and quantity demanded falls

Public good (national defense)

Nonexcludable and nonrivalrous

Special interest effect

Benefits are concentrated costs are widespread

Comparative advantage

Producing the good with lower opportunity cost

Terms of trade Portugal England

1 port wine for 5 wool

Comparative advantage wheat

Philippines

Frictional unemployment

Short-term unemployment while searching for a job

Labor force participation rate

70 percent

Doubling time (10 percent growth)

7.2 years

Harm to long run growth

Weak property rights

GDP shortcoming

Does not include leisure

Not counted in GDP

Used car purchased by Lyft driver

Real GDP same population falls

Per capita GDP rises

Real GDP vs nominal GDP

Real uses base year prices nominal uses current prices

GDP deflator

Measures average price level of all final goods and services

Unemployment rate problem

Does not count underemployed workers

Fed stimulates economy

Decrease administered rates

Federal funds market

Where banks borrow and lend reserves

Increase in muffin supply

Prices fall and sales rise

Volunteer labor

Not counted in GDP

Insecure property rights

Reduce investment and slow growth

Boom phase

Inflation rises unemployment falls growth increases

Active stock trading poor strategy

I and II

Workers save more

Supply of loanable funds shifts right interest rates fall

Money growth inflation calculation

Inflation equals 5 percent

Optimism and borrowing boom

Velocity rises AD shifts right

Velocity increase

AD shifts right

Fed increases money growth (expectations)

SRAS shifts left

Policies that stimulate AD

All of the above

Time lags policy

I and III

Expansionary monetary policy

Increase money growth reduce real interest rates

SRAS tradeoff

Inflation and economic growth

Stagflation problem

Fixing one issue worsens the other

SRAS shifts left

When inflation expectations rise

LRAS shifts left

Unpredictable enforcement of laws

Supply of francs rises demand falls

Exchange rate falls

Not benefit of trade

Trade ensures no job loss

Correct areas (trade graph)

I III and IV

World price below domestic price

Import cotton

Quota misconception

Does not reduce domestic producer surplus

Country closes trade

Total surplus decreases; some gain others lose

Current account deficit

Capital account surplus

Imports steal dollars argument flaw

Dollars return via exports or investment

Trade creates value

Both sides benefit

Iowa car crop argument

All of the above

Economics definition

Study of choices under scarcity

Responding to incentives

Change behavior due to benefits or costs

Increase in supply

Supply curve shifts right

Producer surplus increase

Increases from BEC to ABC

Supply increase effect

Consumer surplus increases

Processors and memory

Complements

Efficient equilibrium

Maximizes total surplus

Tax on milk sellers

Price increases

Increase in demand

Quantity supplied increases

Market equilibrium

All of the above conditions hold

Inferior good example

McDonalds hamburgers

Price floor above equilibrium

Surplus and deadweight loss

Tax on gasoline

Price rises quantity falls

Lack of competition

Higher prices lower output

Public choice explanation

Special interest effect

Comparative advantage trade

Both countries consume more

Philippines advantage

Wheat

Frutiopia opportunity cost

1 apple costs 5 bananas

Seasonal unemployment

Occurs at certain times of year

Consumption calculation

11.5 trillion

Included in GDP

New restaurant furniture

GDP deflator definition

Measures price level

National defense argument flaw

Foreign goods not inherently dangerous

Imports argument flaw

Dollars return through trade

Bastiat argument

Blocking trade is harmful like blocking sunlight