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Midterm

Midterm Notes.docx

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Department
Economics
Course
ECON 1000
Professor
Shadab Qaiser
Semester
Winter

Description
CHAPTER 2 -production possibilities frontier (PPF)- boundary b/w combos of goods and services that can be produced within the given resources and those that cannot -bows outward b/c resources are not equally productive and as the quantity produced of each good increases, so does its opportunity cost - production efficiency- cannot produce more of one good without producing less of another -produce goods and services at the lowest possible cost -points on the PPF are efficient -allocative efficiency- when goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit -marginal cost- opportunity cost of producing one more unit -marginal benefit- benefit received from consuming one more unit of it -measure by the amount that a person is willing to pay for an additional unit MB> MC= continue to increase the activity MB=MC = optimum point (max benefit) MB marginal cost -law of supply- the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied -results from the general tendency for the marginal to increase as the quantity produced increases -supply curve- relationship b/w quantity supplied and its price when all other influences on producers’ planned sales remain the same -supply- entire relationship between the quantity supplied and the price of a good -quantity supplied- amount that producers plan to sell during a given time period at a particular price -when the price of the good changes and other influences on sellers’ plans remain the same, the quantity supplied changes and there is a movement along the supply curve -if the price remains the same but some other influence on sellers’ plans changes, supply changes and the supply curve shifts -equilibrium- situation in which opposing forces balance each other -equilibrium in a market occurs when the price balances the plans of buyers and sellers -equilibrium price- price at which the quantity demanded equals the quantity supplied -equilibrium quantity- quantity bought and sold at the equilibrium price CHAPTER 4 -price elasticity of demand- quantity demanded to a change in its price when all other influences on buyers’ plans remain the same
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