Aggregate demand and aggregate supply--Aggregate demand curve is a curve that shows the quantity of goods and services that households (C), firms (I), Government (G), and customers abroad (Exports-Imports) want to buy at each price level. Aggregate demand slopes downward because: Wealth Effect, Interest rate effect, Exchange rate effect. Shift in Aggregate Demand (AD). AD increases in (shifts to the right) when Consumption, Investment, Government spending, or Net Exports increase. Aggregate supply curve is a curve that shows the quantity of goods and services that firms choose to produce and sell at each price level. Sticky wage theory: Nominal wages may increase at the expected rate of inflation. Sticky price theory: Some prices adjust slowly because of menu costs. What shifts the long run supply will shift the short run supply curve plus sellers price expectations. An increase in the expected price level decreases the short run supply curve since firms and workers are likely to agree to higher wage increases which raises the cost of production. Long run equilibrium is where all three curves (AD, LRAS and SRAS) cross. Comparative Advantage-- economics is the study of scarcity (can’t get all for free, have to make choices, resources [land, labor, capital, entrepreneurship] are limited) and choice (decide what to do and not do). Comparative advantage means that an individual or country can produce at a lower opportunity cost than another producer-When individuals and countries specialize in their comparative advantage and trade, they can consume beyond their production possibilities frontiers. Perfect competition, Costs--Short run-Time before firms have enough time to enter or exit an industry. Long run-Firms have enough time to exit or leave an industry. Economic profit=total revenue-(explicit costs+implicit costs). Total revenue=price times quantity. Total costs include both explicit costs [costs that require a money expenditure such as wages and rent] and implicit costs [costs that…
Exploiting the vulnerable 5
Exploiting the Vulnerable.
The fast food industry sees children as a future as well as current market and hence brand loyalty at a young age helps in the quest of continued sales later. $15-17 billion is spent by companies advertising to children in the US. Over $4 billion was spent in 2009 by the fast food industry alone. Children are naïve about advertising and are easily controlled and exploited by…
Smith v. Shannon, 100 Wn. 2d 26, 666 P.2d 351 (1983)
In February 1976, Vera Smith was referred by her attending physician Dr. Raymond Lynberg to Dr. Roger Shannon, a radiologist with defendant Radiology Associates of Spokane. Regarding Ms. Smith’s possible kidney complications, Dr. Shannon chose to administer an intravenous pyelogram (IVP) to Ms. Smith and took X-rays on her kidneys and ureters. Before administering the IVP, Dr…
Derivatives and the Financial Crisis
Tessa M. James
Fred R. Becker, Jr
The National Bureau of Economic Research (NBER) defines an economic recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." Most economists identify recessions when a country experiences two or more quarters of contraction in…
make ethanol out of it. In the mid-1970s during the first energy crisis, Brazil actively supported the development of sugarcane ethanol as a substitute for gasoline in order to reduce its dependence on Middle East (GWU). This is a good example of adapting an invention11 for innovation12.
Russia is a capital-intensive 13economy. However, years of low investment have left much of Russian industry antiquated and highly inefficient (econ watch). Heavy regulation14 from the government has also…
American Military University
Note-taking skills are a necessary tool to have and use when it comes to studying. By utilizing notes, studying for a test or quiz can be made much easier. Note-taking skills can help a person better understand the material being learned. Some people learn better when they write things down, and taking notes help them learn better versus just reading the material. When taking notes, one can go back at a…
Econ 111, Summer 2008 Practice Final
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Typically, borrowers have superior information relative to lenders about the potential returns and risks associated with an investment project. The difference in information is called ________, and it creates the ________ problem.
adverse selection; risk sharing
In economics, there are always uncertainties involved. These uncertainties include:
Uncertainty = risk
How do you reduce risk?
How can you reduce the income uncertainty or risk?
Imposing minimum wage.
How can you reduce the uncertainty about quality?
Imposing certainty standard.
Getting more information on the product
What if you are trading internationally, what is the risk you face?
Chapter 7- Consumers, Producers & the Efficiency of Markets
Willingness-to-pay: the maximum amount that a buyer will pay for a good.
Consumer Surplus = Value to buyers – Amount buyer pays and
Producer Surplus = Amount sellers receive – Cost to sellers
Since amount buyer pays = amount sellers receive
Total Surplus = Consumer Surplus + Producer Surplus or
Total Surplus = Value to buyers – Cost to sellers
The primary authority for software revenue recognition is AICPA Statement of Position (SOP) No. 97-2, Software Revenue Recognition, which is the result of about 12 years of development work from 1985 through 1997. It applies to both public companies (according to SAB 104) and private enterprises.
Under SOP 97-2, recognition of revenue generally occurs at delivery if a four-part conjunctive test is met. Software delivery should be straightforward and require no special production…