ECO100Y1 Final: eco100 summary notes.pdf

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12 Dec 2013
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Objectives for an economy equity fair efficiency scarcity of resources full employment growth gdp, gdp/capita stability inflation, exchange rate, balance of trade. Command based system central authority determines what gets produced, quantity, price, where labourers work no competition not efficient. Mix system government intervention is beyond the market system. Assumptions only two goods are produced: guns and butter fixed resources/inputs/capital/technology efficient. Eco100y1a. doc linear transformation is constant: c unobtainable, d underutilization, unemployment, e full employment, g to h sacrificed 2 butters for 1 gun opportunity cost. 5 (million crates) non-linear hard to transform from butter to gun. Partial equilibrium analysis (single market): supply and demand. Demand for good x: px q. 0: household income q d x. 0< (inferior good: py, pz price of other goods q. Aggregate market demand for good x: shifting of the demand schedule, household income, prices of other goods, tastes/peferences, expectation. Supply for good x: px q.

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