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Study Guide

ECN 104- Final Exam Guide - Comprehensive Notes for the exam ( 68 pages long!)


Department
Economics
Course Code
ECN 104
Professor
Teresa Fung
Study Guide
Final

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Ryerson
ECN 104
Final EXAM
STUDY GUIDE

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Basic Concepts of Microeconomics
Midterm: Chapter 1, 2, 3, 6
Final: Chapter 1, 2, 3, 6, 7, 8, 9, 10, 11, 12
What is Economics?
Economics is the social science concerned with the efficient use of scarce
resources to obtain the maximum satisfaction of society’s unlimited wants
o Study of how individuals, institutions, and society make optimal
choices under conditions of scarcity
Key words: scarcity, wants, choices, incentives
Scarcity Choice
o Cannot pick everything
Incentives Decisions Opportunity Cost
Opportunity Cost: what potential gain is given up when an alternative is
chosen
o Each alternative has a value
The Economic Problem of a Consumer
Limited Income
Unlimited Wants: Bundle of goods/services
The Budget Line: lists the possible combinations available
o ie Given $120 to buy DVDs and books, what are the options if a DVD is
$20 and a book is $10
o Total expenditure remains $120
o Budget Line (on graph) = Maximum
o Linear equation y = mx+b
m = slope, b = intercept
o 20y + 10x = 120 y = -1/2x + 6
Cost Benefit Decision: Marginal Analysis
What do we lose? What to we gain?
If marginal costs > marginal benefits, don’t do it
If marginal costs < marginal benefits, do it
o ie Moving to a shorter fast food line
DVD ($20)
Book ($10)
6
0
5
2
4
4
3
6
2
8
1
10
0
12
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o Benefits: time saving
o Costs: physical effort
o Risk: No certainty of which line will move faster
Macroeconomics vs Microeconomics
Microeconomics
o Studies the behaviour of individual economic units
Ie consumer, producer
o Look at the choices of specific decision making units
Consumers: how to maximize utility value
Producers: how to maximize profits
Demand and supply of a particular good/service in a market
o A Worm’s Eye View
Macroeconomics
o Studies the behaviour of economic aggregates resulting from the
activities of many different decision makers in many different markets
o Views the economy as a whole
National income, total consumption, total investment, total
exports, average price level of all goods and services
o A Bird’s Eye View
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