Macro Terms 1.1-1.3

Utility

Satisfaction

Marginal

Additional

Allocate

Distribute

Price

Consumer Pays

Cost

seller pays

Four Factors of Production

Land, Labor, Capital, Entreprenurship

Productivity

number of outputs per input

Production Possibilites Curve (fronteir

scarcity

trade offs

opportunity costs

efficiency

assumption # 1

2 good produced

assumption #2

full employment of resources

assumption 3

fixed resources (Ceteris Paribus)

assumption 4

fixed technology

above ppc curve

impossible/unattainble

below ppc curve

ineffecient/unemployment1

law of increasing opportunity cost

more of any good= increased opportunity cost

shifter of ppc #1

change in resource quant/quality

ppc changer #2

change in productivity/technology

per unit opportunity cost

opportunity cost/units gained

terms of trade

x>fair>x

OOO

Output: Other goes over

IOU

Input: Other goes under

Law of Demand

Inverse Relationship between price and quantity demanded

Substitution Effect

price increase = consumer buys less

income effect

price goes down= more people can afford

law of diminishing marginal utility

as you have something more and more the satisfaction will go down

demand shifter 1

taste and prefrences

demand shifter 2

number of consumers

demand shifter 3

price of related goods

demand shifter 4

income

demand shifter 5

future exceptions

substitutes

used in place of one another

complements

bought and used together

normal goods (luxury)

income + = demand+

inferior goods (ramen)

income + = demand -

law of supply

direct relationship between price and quantity supplied

shifter of supply 1

price/availability of inputs (resources)

shifter price 2

number of sellers

shifter price 3

technology

shift price 4

gov action (tax and subsidies)

shifter supply 5

expectations of future profit

price ceiling

max legal price seller can charge for product ( helps consumer)

price floor

minimum legal price seller can cell product (help producer)