econ review

Economic Principles and Concepts

1. Positive Demand Shock

  • Definition: A situation where an increase in demand leads to a rightward shift of the demand curve.

  • Implications: The increase in demand usually results in higher prices and higher quantities of goods sold.

2. Supply and Technology

  • Improvement in Technology:

    • A fundamental aspect in economics that enables production of more goods using the same input.

    • Leads to an increase in supply represented by a rightward shift of the supply curve.

  • Example: Better technology in farming can allow farmers to produce more crops with the same amount of land.

3. Test Taking Strategies

  • Prioritize Familiar Questions:

    • Recommendation: Answer questions that you are confident about first to secure points.

    • Strategy: Skip over uncertain questions and return to them later.

  • Importance for MBA Preparation:

    • Test-taking skills are crucial not only for current exams but also for future academic endeavors, such as an MBA program.

4. Identifying Supply and Demand Responses

  • Recognizing Market Changes:

    • Example Scenario: New producers entering the market leads to an increase in supply.

    • Deduction Approach: If a question references producers, you can infer it relates to supply factors.

  • Method: Eliminate answer choices that do not pertain to the question to narrow down options.

5. Economic Equilibrium

  • Definition: A situation where the supply of goods matches demand; prices stabilize.

  • Price Implications:

    • If the price is below equilibrium, demand exceeds supply leading to shortages.

    • Example Price Point: At a price of $15, if the equilibrium price is higher, it signals excess demand over supply.

6. Gross Domestic Product (GDP)

  • Definition: Measures the economic performance of a country by calculating the total value of all final goods and services produced.

  • Importance of Value-Added:

    • GDP considers value added at different production stages - how much value is created in the production process.

  • Intermediate Goods vs. Final Use:

    • Clarification: Intermediate goods are not counted in GDP as they are used to produce final goods.

    • Final goods are the end products sold to consumers.

7. Calculating GDP

  • Formula for GDP Calculation:

    • Use the base year price and current year quantity.

    • Example Calculation:

    • Given quantities of goods and their associated prices:

      • For good A: 45 units at $3; For good B: 30 units at $5.

    • Calculation: GDP=(45∗3)+(30∗5)GDP = (45 * 3) + (30 * 5)

  • Example Result: Calculate individual components and sum them up for total GDP.

8. Interaction and Engagement in Study Sessions

  • Collaborative Learning: Engage with peers during study sessions.

  • Encourage Questions: Open the floor for questions to enhance understanding and clarify complex topics.

9. Memorizing Key Information

  • Strategies for Memorization:

    • Recommended tools: Create decks for quick revision, particularly for key concepts or historical data such as the preamble for Biden.

  • Use of Quizzes for Reinforcement: Taking quizzes can aid in retention of critical information.

10. Miscellaneous Learning Points

  • Personal Anecdotes: Sharing personal experiences can foster a supportive learning environment.

  • Importance of Continuous Engagement: Keep discussing topics and clarifying doubts among peers to solidify understanding.