Econ 510 Exam 1 Study Guide

Intermed Micro Exam 1 Chapter 1 (Powerpoint Slides) Economics- Unpoor wants and poor media Microeconomics- Branch of economics that deals with the action of special economic units. Units such as, consumers, immovables, employmenters, and investors, as well-mannered-mannered as the bargains that these units include. Macroeconomics- Branch of economics that deals with tenor economic unsteadys. Such as the roll and development objurgate of social output, curiosity-behalf objurgates, unemployment, and inflation. Micro Economics is a harmony of trade-offs that consumers, employmenters & immovables visage and shows how these trade-offs are best made.
Key Players – Consumers, Employmenters, Immovables Trade offs ce Consumers: Poor Proceedss – To prevent or to bestow. If prevent then ce HOW LONG and of-conduct HOW MUCH If bestow then on WHAT and HOW MUCH This gives family to the CONSUMER THEORY, which talks environing the preferences, choices, benefit absence of wonder. Trade offs ce Employmenters: Period: Leisure Vs. Labor Whether and when to penetrate the employment cece…. Pay lamina is subject on teaching Choice of employment: Risky yet haughty paying VS protected yet hither specie Trade offs ce Immovables: What to fruit? How fur to fruit? Copy: Any posse in the globe would charity to fruit anything and earn proceeds yet can’t do it.
Central prepared economy- Values are be by the gov’t In a bargain economy- Values are fast by the interactions of consumers, employmenters, and immovables. These interactions happen in bargains—collections of bribeers and venders that concertedly mention the value of a amiable-tempered-natured. In economics, EXPLANATION and PREDICTION are urban on theories and models. Theories- are exposed to expound observed phenomena in stipulations of a be of basic rules and assumptions. Model – is a logical representation, urban on economic plea, of a immovable, a bargain, and some other being.

Positive Analysis – describing harmonys of reason and amiable-tempereds. Normative Analysis – Analysis examining questions of what ought to be. Competitive Bargain – bargain with MANY bribeers and venders trading selfselfidentical products so that each bribeer and vender is a value taker. Non-Competitive Bargain – Vender or bribeer can rule the values Bargain Expression – GEOGRAPHICAL and RANGE of products Why is expression momentous? To earn to apprehend environing express and germinative competitors and its beneficial in making Public plicies. Copy: Pain Killers REAL Vs. NOMINAL values
Nominal value – Absolute value of a amiable-tempered-natured, UNADJUSTED ce inflation Genuine Value – Value of a amiable-tempered-natured-natured referring-to to an tenor appraise of values; value ADJUSTED ce inflation Consumer Value Index – Appraise of the tenor value roll. Fruitr Value Index – Appraise of the tenor value roll ce INTERMEDIATE products and WHOLESALE amiable-tempered-natureds. REAL vs. NOMINAL pricing The genuine value of eggs in 1970 dollars is fitted as follows: The genuine value of eggs in 1970 dollars is fitted as follows: The genuine value of eggs in 1990 dollars is fitted as follows: Public Policy – * Great application on Economics * Can modify conduct of the bargain
Chapter 2 (Powerpoint Slides) Provide Flexion – Harmony among the aggregate of a amiable-tempered-natured-natured that fruitrs are ready to vend and the value of the amiable-tempered-natured-natured The Provide flexion is upward slopping: The haughtyer the value, the further immovables are telling and ready to fruit and vend. If cemation absorbs gravitate, immovables can fruit the selfselfidentical aggregate at a inferior value of a abundantr aggregate at the selfselfidentical value. The provide flexion then displaces to the proper. Insert Graph by hand: The Provide Flexion – is thus a harmony among the aggregate provided and the value. We can transcribe this harmony as an equation: QS = QS(P) Other Varitelling That Affect Provide are:
Formation absorbs, including salary, curiosity-behalf beak, and the absorbs of unripe materials. When cemation absorbs dismiss, output growths no stuff what the bargain value happens to be. The unimpaired provide flexion thus displaces to the proper. Modify in provide or Displaces in the provide flexion Vs Modify in the aggregate provided or Stirments parallel the provide flexion. The Claim Flexion – Harmony among the aggregate of a amiable-tempered-natured-natured that consumers are ready to bribe and the value of the amiable-tempered-natured. Equation can be written: QD = QD(P) Insert Graph by hand: A haughtyer claim flexion displaces the claim flexion to the proper. Downward Sloping) Displaceing the Claim Flexion – If the bargain value were held inunsteady at P1, we would ceecast to behold an growth in the aggregate claimed—say from Q1 to Q2, as a fruit of consumers’ haughtyer proceedss. Bereason this growth would happen no stuff what the bargain value, the fruit would be a displace to the proper of the unimpaired claim flexion. Insert Graph by hand: Displaceing the Claim Flexion Substitutes – Two amiable-tempered-natureds ce which an growth in the value of individual controls to an growth in the aggregate claimed of the other. Complements – Two amiable-tempered-natureds ce which an growth in the value of individual controls to a dismiss in the aggregate claimed of the other.
THE MARKET MECHANISM The bargain clears at value P0 and aggregate Q0. At the haughtyer value P1, a residue develops, so value gravitates. At the inferior value P2, there is a weakage, so value is tell up. Insert Graph by hand: Equilibrium (aka bargain defecation) value – Value that equates the aggregate provided to the aggregate claimed. Bargain Mechanism- Tendency in a frank bargain ce value to modify until the bargain clears. Residue – Situation in which the aggregate provided exceeds the aggregate claimed. Weakage – Situation in which the aggregate claimed exceeds the aggregate provided. CHANGES IN MARKET EQUILIBRIUM
New Equilibrium subjoined Displace in Provide When the provide flexion displaces to the proper, the bargain clears at a inferior value P3 and a abundantr aggregate Q3. Insert Graph by hand: New Equilibrium subjoined Displace in Claim When the claim flexion displaces to the proper, the bargain clears at a haughtyer value P3 and a abundantr aggregate Q3. Insert Graph by hand: New Equilibrium subjoined Displaces in Provide and Claim Provide and claim flexions displace balance period as bargain stipulations modify. In this copy, properward displaces of the provide and claim flexions control to a partially haughtyer value and a fur abundantr aggregate.
In open, modifys in value and aggregate consist on the abundantness by which each flexion displaces and the pattern of each flexion. Insert Graph by hand: From 1970 to 2007, the genuine (constant-dollar) value of eggs demolish by 49 percent, time the genuine value of a garden teaching rose by 105 percent. What are the practicable reasons ce such a severe modify : The mechanization of poultry farms severely inaudible the absorb of supple eggs coupled with severe dismiss in claim ce eggs displaceed by health-conscious population who tended to desert eggs.
As ce garden, growths in the absorbs of equipping and maintaining new-fangled classrooms, laboratories, and libraries, parallel with growths in grant salaries, pushed the provide flexion up. Claim ce garden growthd as a abundantr percentage of a growing compute of haughty train graduates firm that a garden teaching was vital & paying. Bargain ce Eggs The provide flexion ce eggs displaceed downward as cemation absorbs demolish; the claim flexion displaceed to the left as consumer preferences modifyd. As a fruit, the genuine value of eggs demolish severely and egg nearening rose. Insert Graph by hand: Bargain ce Garden Teaching
The provide flexion ce a garden teaching displaceed up as the absorbs of equipment, defence, and staffing rose. The claim flexion displaceed to the proper as a growing compute of haughty train graduates desired a garden teaching. As a fruit, twain value and enrollments rose severely. Insert Graph by hand: Provide and Claim ce New York City Office Space Subjoined 9/11 the provide flexion displaceed to the left, yet the claim flexion so displaceed to the left, so that the middle rental value demolish. Insert Graph by hand: Extensileity – Percentage modify in individual varitelling fruiting from a 1% growth in another.
Value Extensileity of Claim – Percentage modify in aggregate claimed of a amiable-tempered-natured-natured fruiting from a 1% growth in its value. Direct Claim Flexion – Claim flexion that is a STRAIGHT LINE. Direct Claim Flexion The value extensileity of claim consists referable barely on the prosper of the claim flexion yet so on the value and aggregate. The extensileity, coercion-this-reason, varies parallel the flexion as value and aggregate modify. Prosper is inunsteady ce this direct claim flexion. Near the culmination, bereason value is haughty and aggregate is diminutive, the extensileity is abundant in body. The extensileity becomes diminutiveer as we stir down the flexion.
Insert Graph by hand: Unboundedly Extensile Claim – Principle that consumers succeed bribe as fur of a amiable-tempered-natured-natured as they can earn at a uncompounded value, yet ce any haughtyer value the aggregate claimed drops to naught, time ce any inferior value the aggregate claimed growths extraneously designation. a. ) Ce a dull claim flexion, ? Q/? P is unbounded. Bereason a puny modify in value controls to an gigantic modify in claim, the extensileity of claim is unbounded. Insert Graph by hand: Completely Inextensile Claim – Principle that consumers succeed bribe a urban aggregate of a amiable-tempered-natured-natured regardhither of its value. b. Ce a upright claim flexion, ? Q/? P is naught. Bereason the aggregate claimed is the selfselfidentical no stuff what the value, the extensileity of claim is naught. Insert Graph by hand: Other Claim Extensileities Proceeds Extensileity of Claim – Percentage modify in the aggregate claimed fruiting from a 1% growth in proceeds. Cross-Value Extensileity of Claim – Percentage modify in the aggregate claimed of individual amiable-tempered-natured-natured fruiting from a 1% growth in the value of another. Extensileities of Provide Value Extensileity of Provide – Percentage modify in aggregate provided fruiting from a 1% growth in value.
SHORT-RUN vs LONG-RUN ELASTICITIES Claim Gasoline: Weak-Course and Hanker-Course Claim Flexions a. ) In the weak course, an growth in value has barely a diminutive amiable-tempereds on the aggregate of gasoline claimed. Motorists may press hither, yet they succeed referable modify the kinds of cars they are driving balancenight. In the hankerer course, so-far, bereason they succeed displace to diminutiveer and further fuel-efficient cars, the amiable-tempereds of the value growth succeed be abundantr. Claim, coercion-this-reason, is further extensile in the hanker course than in the weak course. Insert Graph by hand:

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