ECON Final

Economics is

the study of how a society with unlimited wants allocates scarce goods and services across competing ends

allocation is

how we get the scares goods and services to the consumers who want those goods and services

economic models

help us explain/predict economic events

endogenous variables is

what we explain/predict (on axis of graph)

exogenous variables are

shift variables

production possibilities curve (PPC)

explains/predicts changes in quantity of output produced within a country. it includes every good produced in this country

inputs are

raw materials, intermediate goods

factors of production

labor, capital - money, machines, equipment, entrepreneurship, and land

opportunity cost is

the cost of the next best alternative

marginal analysis is

how small change in one variable can have on another variable

comparative advantage is

when a country has a lower opportunity cost of producing a specific good relative to some other country (lower cost means better!)

demand and supply model helps

explain/predict changes in price and quantity (sold) in a market

demand curve is

quantity demanded at each possible price. as price goes up, demanders buy less (quantity demanded goes down)

supply curve is

quantity supplied at each possible price. as price goes up, suppliers want to sell more (quantity supply goes up)

demand curve shift variables

if one of these change, then demand curve will shift

what are some variables that directly relate to “demand decision”?

income, normal goods, inferior gods, etc.

supply curve shift variables are

variables that directly affect/relate to “supply decision”

equilibrium is

the point of balance. each market will always operate at an equilibrium (assuming nothing prevents the market from doing so)