economics

important concepts

opputninty cost

The value of the next best alternative that is given up when a choice is made.

law of supply

the price of a good rises, the quantity supplied rises, and as price falls, quantity supplied falls

law of demmand

the price of a good rises, the quantity demanded falls, and as price falls, quantity demanded rises.

market surplus

quantity supplied is greater than quantity demanded.

market shortage

quantity demanded is greater than quantity supplied

real gdp per capita

Real GDP per capita= gdp divided by population

nominal gdp

GDP measured using current prices

real GDP

GDP adjusted for inflation

Material living standards

Things you can buy or consume — goods, services, income, housing

Non‑material living standards

Quality of life factors — health, happiness, leisure time, safety, environment

limitations of gdp

It ignores volunteer work, housework environmental impacts and distrubtion of income

labour force formula

Labour Force = Number Employed + Number Unemployed

unemployment rate

Unemployment Rate = (Number of Unemployed ÷ Labour Force) × 100%

3 main economic performance indicators

Economic growth (GDP change) Unemployment rate Inflation rate (CPI — rise in general price level)

Calculating real GDP growth rate

volume year 2 - volume year 1/volume year 1 ×100

nonminal gdp growth rate

value year2 - value year1/ value year1 × 100

purchasing power

refers tothe anoubt of goods and services money can buy

factors affecting demmand

price of the good itself, income levels, exceptions of the consumers, taste and prefences number of consumers

factors effecting supply

price of the good, cost of production, exepactions of producers, technology, number of producers, government.

what makes demmand or supply either shift or move along eaither the demmand or supply curve

price factor causes movement non price factor causes shift

equilbrium price

Price where quantity demanded = quantity supplied

Equilibrium Quantity

Quantity bought and sold at that price.

market equilbrium

occurs where the demand and supply curves intersect