Textbook Notes (369,074)
Canada (162,369)
Economics (818)
ECON 1050 (382)
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All Econ chapter Notes.docx

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Department
Economics
Course Code
ECON 1050
Professor
Eveline Adomait

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Economics Chapter 2Chapter 2 Opportunity cost is a ratio It is the decrease in the quantity produced of one good divided by the increase in the quantity produced of another good as we move along the production possibilities frontierThe outwardbowed shape of the PPF reflects increasing opportunity cost The PPF is bowed outward because resources are not all equally productive in all activities When goods and services are produced at the lowest possible cost and in the quantities that provide the greatest possible benefit we have achieved allocative efficiency To make decentralized coordination work four complementary social institutions that have evolved over many centuries are needed They are Firms Markets Property Rights Money Production Possibilities Frontier PPF Is the boundary between those combinations of goods and services that can be produced and those that cannot Production Efficiency If we produce goods and services at the lowest possible costPreferences Are a description of a persons likes dislikes Marginal Benefit From a good or service is the benefit received from consuming one more unit of it Marginal Benefit Curve Which is a curve that shows the relationship between the marginal benefit from a good and the quantity consumed of that good Economic Growth Increases our standard of living but it doesnt overcome scarcity and avoid opportunity cost Technological Change The development of new goods and of better ways of producing goods and services Capital Accumulation Is the growth of capital resources including human capital Comparative Advantage A person has a comparative advantage in an activity if that person can perform the activity at a lower opportunity cost than anyone else Absolute Advantage Involves comparing productivitiesproduction per hourwhereas comparative advantage involves comparing opportunity costs LearningbyDoing LearningbyDoing is the basis of dynamic comparative advantageDynamic Comparative Advantage Is a comparative advantage that a person or country has acquired by specializing in an activity and becoming the lowestcost producer as a result of learningbydoingFirm Economic unit that hires factors of production and organizes those factors to produce and sell goods and services Example Roots Canadian TireMarkets A market is any arrangement that enables buyers and sellers to get information and to do business with each other Example is when oil is bought and sold the world oil market Property Rights The social arrangements that govern the ownership use and disposal of anything that people valueReal property includes land and buildings Financial property includes stocks and bonds and money in the bank Money Any commodity or token that is generally acceptable as a means of paymentChapter 37 Demand and Supply Competitive Market A market that has many buyers and many sellers so no single buyer or seller can influence the price Money Price The price of an object is the number of dollars that must be given up in exchange for it Relative Price The ratio of one price to another A relative price is an opportunity cost Quantity Demand Is the amount that consumers plan to buy during a given time period at one particular price The Law of Demand States Other things remaining the same the higher the price of a good the smaller is the quantity demanded and the lower price of a good the greater is the quantity demanded Substitutes Other goods that can be used in its place
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