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Midterm 1 - Flashcards

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Class:ECN 141 - Principles of Macroeconomics
Subject:Economics
University:Utica College
Term:Spring 2010
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Ch 1 Production Possibilities Definition - The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology Drawing the curve Features
Ch 1 Opportunity cost – The next most desired goods and services foregone to obtain something else What is given up to undertake a chosen activity Associated with every decision For example, if we choose to produce bread then we cannot produce pizza crust with the same flour
Ch 2 Gross Domestic Product (GDP): The total market value of all final goods and services produced within a nation’s borders in a given time period Per Capita GDP: The dollar value of GDP divided by total population; average GDP Output per person in an economy if all output were divided up evenly across the population
Ch 2 Human capital: The knowledge and skills possessed by the workforce Productivity: Output per unit of input, such as output per labor hour Technological Advance: Finding new and better ways to produce goods and services
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Ch 2 Role of Government -Providing a Legal Framework -Protecting the Environment Externalities: Costs (or benefits) of a market activity borne by a third party -Protecting Consumers -Protecting Labor -Income Distribution
Ch 3 Law of Demand: The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus Demand Shifters – Change is demand -Tastes -Income -Other goods – substitutes and complements in consumption -Expectations -# of buyers Change in quantity demanded – movement along the curve
Ch 3 Law of Supply: The quantity of a good supplied in a given time period increases as its price increases, ceteris paribus Supply shifters – Change in Supply -Technology -Factor cost -Other goods – substitutes and complements in production -Taxes and subsidies -Expectations -# of sellers Change in quantity supplied – movement along the curve
Ch 3 Draw market demand and market supply curves Find equilibrium (Price and Quantity) Shortage – quantity demanded > quantity supplied Surplus – quantity supplied > quantity demanded
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Ch 3 Market Equilibrium Effects of Changes in Demand When demand changes: The supply curve does not shift. But there is a change in the quantity supplied. Price and quantity change in the same direction as the change in demand.
Ch 3 Market Equilibrium Effects of Changes in Supply When supply changes: The demand curve does not shift. But there is a change in the quantity demanded. Price changes in the same direction as the change in supply. Quantity changes in the opposite direction to the change in supply.
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 Ch 1Production Possibilities
Definition - The alternative combinations of final goods and services that could be produced in a given time period with all available resources and technology

Drawing the curve
Features
 Ch 1Opportunity cost – The next most desired goods and services foregone to obtain something else
What is given up to undertake a chosen activity
Associated with every decision
For example, if we choose to produce bread then we cannot produce pizza crust with the same flour
 Ch 2Gross Domestic Product (GDP): The total market value of all final goods and services produced within a nation’s borders in a given time period
Per Capita GDP: The dollar value of GDP divided by total population; average GDP
Output per person in an economy if all output were divided up evenly across the population
 Ch 2Human capital: The knowledge and skills possessed by the workforce
Productivity: Output per unit of input, such as output per labor hour
Technological Advance: Finding new and better ways to produce goods and services
 Ch 2Role of Government
-Providing a Legal Framework
-Protecting the Environment
Externalities: Costs (or benefits) of a market activity borne by a third party
-Protecting Consumers
-Protecting Labor
-Income Distribution
 Ch 3Law of Demand: The quantity of a good demanded in a given time period increases as its price falls, ceteris paribus
Demand Shifters – Change is demand
-Tastes
-Income
-Other goods – substitutes and complements in consumption
-Expectations
-# of buyers
Change in quantity demanded – movement along the curve
 Ch 3Law of Supply: The quantity of a good supplied in a given time period increases as its price increases, ceteris paribus
Supply shifters – Change in Supply
-Technology
-Factor cost
-Other goods – substitutes and complements in production
-Taxes and subsidies
-Expectations
-# of sellers
Change in quantity supplied – movement along the curve
 Ch 3Draw market demand and market supply curves
Find equilibrium (Price and Quantity)
Shortage – quantity demanded > quantity supplied
Surplus – quantity supplied > quantity demanded
 Ch 3Market Equilibrium
Effects of Changes in Demand
When demand changes:
The supply curve does not shift.
But there is a change in the quantity supplied.
Price and quantity change in the same direction as the change in demand.
 Ch 3Market Equilibrium
Effects of Changes in Supply
When supply changes:
The demand curve does not shift.
But there is a change in the quantity demanded.
Price changes in the same direction as the change in supply.
Quantity changes in the opposite direction to the change in supply.
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