ECONOMICS GR 12 UNIT REVIEW

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nathania k

Last updated 3:47 AM on 1/23/23
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75 Terms

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Economics
science of scarcity and choice, how people make decisions in the face of scarcity
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Opportunity cost
The next best thing you could’ve chose

What you lose by choosing one thing over the other
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Analytical (positive) economics
Factual (direct world observations) based economics
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Normative (policy) economics
Statements/value judgement based economics

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opinion based economics

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The law of increasing opportunity cost
whenever you use a resource, there’s a cost to using it
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the law of diminishing returns
after reaching a certain level, more production becomes less
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Marginal product
extra product gained (additional output from adding input)
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The law of increasing returns to scale
increase output with every input
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productive resource
resources (natural, human, capital) used to make other resources
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Demand
quantity of g&s buyers are willing to purchase (at various given prices/times)
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The law of demand
as price increases, the amount purchased decreases

as price decreases, the amount purchased increases
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quantity demanded
the total g&s consumers will demand over a given period of time
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supply
quantity of g&s sellers are willing to offer (at various given prices/times)
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the law of supply
as price increases, the amount supplied increase

as price decrease, the amount supplied decreases
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quantity supplied
the total g&s suppliers will produce over a given period of time
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equilibrium price
price set by s&d so the surplus/shortage is above/below that price
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non-price factor
holds relationship between price&quantity and d&s (can influence)
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substitute goods
consumers see 2 products similar enough that they can substitute them for each other
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compliment goods
products that go well with each other (compliment each other)
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elasticity
price change in response to G&s
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ceiling price
cap gov places on the max something can cost
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floor prices
cap gov places on the min something can cost
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subsidy
business grant from gov
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quota
limit to how much something can be produced
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minimum wage
$ wage workers are paid for supplying labour to businesses with demand for it
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corporation
owned by shareholders, distinct from its owners

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limited liability
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sole proprietorship
single owner

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full liability
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partnership
two or more person business

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shared liability
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cooperative
equally owned by all workers/members

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worker owned
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stakeholder
partner with interest in the company/profit

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ex. employer, customer, supplier, investor
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the underground economy
underreported/not reported activity for tax/HST purposes
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the theory of the firm
the firm exists & makes decisions to max profit

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relationship between profit, revenue, and costs fully developed
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total revenue
total income your company makes
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total cost
total expense after reaching a certain level of output
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fixed cost
constant cost

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ex. rent or business cost
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variable cost
fluctuating price: goes up with price increases, goes down with price decrease

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ex. wages or salary
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theory of the firm
the firm exists & makes decisions to max profit

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relationship between profit, revenue, and costs fully developed
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the short run
firm’s max capacity becomes fixed because of a shortage of one resource

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max capacity → fixed cost
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the long run
period of time when fixed costs become variable costs

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fixed cost → variable cost
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marginal revenue
additional **revenue** firm gains from producing 1 or + products
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marginal costs
additional **cost** firm gains from producing extra product from extra workers
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economies of scale
cost decreases when company increases production
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perfect competition
uniform product + large # producers
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Monopolistic competition
small diff products + large # sellers
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Oligopoly
small # sellers

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hard entry
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monopoly
one firm dominates market (complete control)
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collusion
secret agreement between firms to change/reduce set prices
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privatization
sell/transfer ownership of public assets to private firms
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deregulation
removing gov control/rules from an economy
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MRPL (marginal revenue product of labor)
additional revenue from marginal product by adding additional workers
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labour union
organization of workers together that promote interests of members & negotiate with employees

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voluntary

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trade union
reps single occupation of workers regardless of where they work
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strike
temporary shut down to force employer to meet union’s demands
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lockout
owner shuts down the place until workers agree to meet their contract
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GDP (gross domestic product)
total value of all g&s produced in a given time period (year)
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unemployment rate
% of labour force not working at any given time
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labour force
anyone over 15 currently employed, willing and able to work, or actively seeking
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participation rate
% of labour force
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full employment
least amount of unemployment

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seasonally adjusted
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frictional unemployment
unemployment from people moving between jobs
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seasonal unemployment
not all jobs can take place year round

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ex. salt truck people
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cyclical unemployment
from reduction of overall spending

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downturns (and upturns?) in the economy
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structural unemployment
==skills don’t match economy’s demand==

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ex. uni prof working at Starbucks??????????????????
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Okun’s law
every % unemployment rate>natural rate, theres a 2% GDP increase
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GDP gap
cost of unemployment measured by **how much potential output exceeds actual output** ???????
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potential gdp
if **unemployment rate
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inflation
increase in average general price levels

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includes factors of production (land, labour, capital)
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Nominal GDP
gdp before inflation
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real gdp
gdp deflator to remove effects of inflation

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inflation adjusted
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LICO (low income cut off)
measure to determine which families spend most of their income on necessities (food, shelter, clothing) vs average family
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Gini coefficient
measures gap between Lorenz curve and perfect equality line, and compares it to how much there could be
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aggregate demand
total demand for g&s produced in an economy
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aggregate supply
total supply for g&s produced in an economy
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recessionary gap
g&s produces in recession vs normal

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gap between ad & full employment equilibrium, high unemployment, low inflation, low gdp growth
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inflationary gap
g&s produced in inflation vs normal

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gap between ad & full employment equilibrium, high unemployment, low inflation, low gdp growth

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