Class Notes (838,363)
Canada (510,866)
York University (35,470)
Economics (1,721)
ECON 1000 (466)

Econ 2 and 3.docx

4 Pages
Unlock Document

ECON 1000
George Georgopoulos

Ch. 2: The Economic Problem  Production possibilities frontier (PPF): boundary between combinations of goods and services that can and cannot be produced.  outward bowed-out shape reflects increasing opportunity cost  not all resources are equally productive in all activities o cannot attain points outside of frontier (scarcity) o points inside frontier are inefficient  resources are unused or misallocated  production efficiency: if goods and services produced at lowest possible cost  allocative efficiency: goods and services are produced at the lowest possible coast and in the quantities that provide the greatest possible benefit o intersection of marginal cost and marginal benefit  preferences: description of a person's likes and dislikes o illustrated on marginal benefit curve  Economic growth: expansion of production, PPF shifts right. Opportunity cost of economic growth is less current consumption o technological change: development of new goods and of better ways of producing o capital accumulation: growth of capital resources, including human capital  comparative advantage: a person can perform the activity at a lower opportunity cost than anyone else  Absolute advantage: a person who is more productive than others. Production per hour o gain from trade if specialization at comparative advantage  dynamic comparative advantage: gaining comparative advantage from learning-by-doing o Learning-by-doing: specialize and by repeatedly producing a particular good or service become more productive in that activity and lower the opportunity cost of producing that good over time.  Economic coordination: decentralized economic planning o Firms: economic unit that hired factors of production to produce and sell goods and services o Markets: arrangement that enables buyers and sellers to get information and to do business with each other  facilitates trade o Property rights: social arrangement that govern ownership, use, and disposal of anything people value  Real property: land, buildings, equipment, etc.  Financial property: stocks, bods, money, etc.  Intellectual property: intangible product of creative effort: books, music, etc. o Money: any commodity or token that is generally acceptable as a means of payment  Circular flow through markets Ch. 3: Demand and Supply  competitive market: a market that has many buyers and sellers, so no single buyer or seller can influence the price  money price: the amount of money needed to buy an item  relative price: opportunity cost, the ratio of price over price of the forgone alternative Demand  demand: relationship between price and quantity demanded  If demand exists then: o must want it o can afford it o plan to buy it  Wants: unlimited desired or wishes that people have for goods and services. Demand reflects which wants to satisfy  quantity demanded: amount that consumers plan to buy during a given time period at a particular price  Law of Demand o other things remain the same, the higher the price of a good, the smaller is the quantity demanded; the lower the price of a good, the greater is the quantity demanded  Substitution effect: when relative cost (opportunity cost) increases, people seek substitutes, thus quantity demand decreases  Income effect: when cost increases, and income remains the same, people cannot afford to buy all of the same things, thus quantity demanded decreases  Willingness and ability to pay: demand curve, the more quantity, the less people are willing to pay. The less the quantity, the more people are willing to pay.  Change in demand: movement of entire demand curve
More Less

Related notes for ECON 1000

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.