Economics First Semester
Economics-‐ the study of the pursuit of scarce resources to satisfy unlimited wants. o Wants >Availability of resources o Economics is about Scarcity o Scarcity-‐ Limited amount (not necessarily a shortage) 4 Main Types of Resources o Land-‐ Not just land, all gifts of nature. § Paid for by Rent. o Labor-‐ Mental or Physical effort. § Paid for with Wages o Capital-‐ Equipment, Tools, Education, Experience, etc., needed to provide a good or service. § Physical or Intellectual capital. § Paid for with Interest o Entrepreneurial Ability § Paid for by Profit Opportunity Cost-‐ Something that we forgo in order to have something else.
o Low O.C. is better. Production Possibility Schedule-‐ I can only add on so much of a product without stalling another. Production Possibilities Curve-‐ Concave or Constant shows the entire demand curve.
Shows full employment at full efficiency. The Entire Curve is the Demand Curve • If car production goes from 20 to 16 in order to make 1 plane the Opportunity Cost is 4.
Aiden Johnson Economics Study Guide •
Supply and Demand o Demand-‐ The various quantities of goods and services that consumers are willing and able to purchase at various prices.
Demand is the entire schedule
Quantity Demand-‐ The amount of a good that people want to buy (demand) at a given price
A change in price does not affect demand, only quantity demand.
Price and Quantity have an inverse relationship with demand.
Price Equilibrium-‐ The price at which the supply equals the quantity demanded
Critical Point-‐ The Point at which the Price Equilibrium meets the Quantity Equilibrium
Quantity Equilibrium-‐ The quantity demanded or supplied at the Equilibrium Price
Aiden Johnson Economics Study Guide
Determinants of Demand o