Important econ shi (study before doing 7-12)

Production Possibility Frontier

Graph that represents things like feasibility, efficiency, oppurtunity costs, and economic growth

What does this specific graph represent (x axis shows quantity of jets) and y axis shows how many trains are being produced

How many trains can be produced while producing a given number of jets.

Points outside the line are (D):

Not feasible/Possible

Points inside the line are (C):

Feasible/possible, but non efficient

Points directly on the line or the line it self (A/B or entire line) are:

Feasible/Possible, and efficient in production

Opportunity Cost

Real Cost of a decision - the value of what you must give up in order to get an item or outcome

Shifts in the Production possibility frontier represent:

economic growth

Supply and demand model

Model of how a competitive market works

Competitive Market

Many buyers and sellers, some good(s) or service

Demand schedule:

shows how much of a good/service consumers would want to buy at different prices

Law of demand

As price rises, the quantity demanded falls

An increase in population:

increases demand

Shift of the demand curve

shows the change in quantity at any given price represented by the change of the original demand curve to the new one

Movement along the demand curve:

change in the quantity demanded of a good that is a result of a change in a good’s price

An increase in demand shows a ______ shift of the demand curve

rightward

Supply schedule

shows how much of a good or service would be supplied at different prices

Supply curve

shows graphically how much of a good or service people are willing to sell at any given price

Shift of the supply curve:

change in the quantity supplied of a good at any given price

Movement along the supply curve

change in the quantity of a good that is a result of a change in that good’s price

any decrease in supply means a _____ shift of the supply curve

leftward

Equilibrium (in a competitive market)

when the quantity demanded of a good equals the quantity supplied of that good, every buyer finds a seller, and vice versa

Equilibrium price

the price at which equilibrium takes place

equlibrium quantity

the quantity of the good bought and sold at equilibrium price

Surplus

When the quantity supplied exceeds the quantity demanded, occurs when the price is above its equilibrium level

Shortage

When the quantity demanded exceeds the quantity supplied, occurs when the price is below its equilibrium level