Ec201 Exam 1

Scarcity: a limited amount of resources and and unlimited amount of wants/desires

1.land: locations

2.labor: skills, work

3.capital: items needed

4.entrepreneurship: ideas, methods

Giving one thing in order to get something else.

EX: 1/12 mower OC = 1 car

& 1 car OC = 12 mowers

On = maximum efficiency

Inside = inefficient; unemployed or underemployed

Outside = unattainable; impossible

Constant: strait line downwards from left to right

Increasing: Slope, bowed, bent downward for L to R

working a job that is below your skill level

EX: college graduate working at Wegmans

macro- The big picture, looking at the whole economy of the U.S.

micro- Narrowed focus; looking at a specific area, product, business

form of measuring the economic state;

C+I+G+(X-M)

C= consumption

I= investments

G= government spending

X= exports

M= imports

investments made in workers by their employers; providing training to employees to increase skill level for greater production

1.proprietorship: 1 owner, ~72% begin this way, make up for ~6% of total sales

2.partnership: at least 2 owners, ~8% begin this way, make up for ~13% of total sales

3.corporation: a group of people recognized as one entity (business, firm), ~20% begin this way, make up 81% of total sales

where resources/ factors of productions are bought and sold

where all finished goods are bought and sold

Market transactions involving and exchange of money for goods (product) or resources (factors)

1.taste

2.income

3.other goods

4.expectations

5.# of buyers

1.factor costs

2.technology

3.profitability of other options

4.expectations

5.# of sellers

demonstrates a change in DEMAND; change caused by anything other than a price change.

Whole curve moves on graph

demonstrates a change in QUANTITY DEMAND; caused only by price change. Points move up or down the original curve

The only time buyers & sellers are happy. Point where quantity supplied is equal with quantity demanded

price floors cause; Not enough demand, too much supplied

price ceilings cause; Too much demand, not enough supplied

someone who directly benefits from another persons purchase/consumption of a public good.

EX: donations for public issue

cost or benefit that a 3rd party recieves

EX: Fence, traffic

private- the consumption by one person, excludes the consumption by others (MY car)

public- The consumption by one person does NOT exclude the consumption by others (highways)

income that is provided to people who do not exchange any goods or services (work) in return. is an ATTEMPT to correct inequity.

ex: s.s., veterans, unemplyment

1.progressive: pay more as you earn more

ex: federal income tax

2. proportional (FLAT): constantly paying the same rate. ex: State sales tax

3. regressive: pay less as you earn more.

ex: s.s. tax beyond the ceiling

Federal: 1-personal income tax, 2-s.s. tax

State: sales tax

Local/Cities: property taxes

Projects are more desirable as long as the benefit exceeds the costs

"marginal" change in, diff between 1 part

cost- what you give

benefit- what you recieve

Must have population size

Must be Like-numbers

Billions to Millions- 3 decimals points to the RIGHT.

Both become millions than DIVIDE GDP by population size

NDP (Net Domestic Product)

NI (National Income)

goods that are bought for the purpose of using them as part of the final product of another good.

ex: goodyear tires and toyota vehicles

Definition: unreported income, "off the books", untaxed income

1. Illegal- drug dealers, prostitutes, bookies

2. Legal- babysitters, painters, lawn mowing

the gradual wearing out of something over time, lessening the value.

Capital Consumption Allowance (C.C.A)

personal income- personal taxes

You can only Consume or SAVE your income.

All persons who are 16+ that are currently working, or are actively seeking paid employment

Labor Force / total population

unemployment rate (5%) X labor force

Labor Force - # people unemployed

Full employment Rate (98%) X Labor Force - # people employed

frustrated job seekers; people who would work but are no longer actively seeking

*do not count, but should.*

**UNDERSTATE unemployment stats**

LIARS; people who claim to be actively seeking employment, but would not actually work when given the opportunity.

*do count, but should not.*

**OVERSTATE unemployment stats**

no work due to changes in season. ex: raft guides, oc waitress

in between jobs, quitting one job before having another one

no work dues to a skills gab, change in technique of job

unemployed due to lack of aggregate demand, bad economic state. ex: bad economy, no new houses, builders not needed

the Lowest Level of unemployment Acceptable. DOE NOT mean all persons have a job; allows room for frictional unemployment

4, 5, 6%

PPP- production IF ALL people resources & people used

IPP- Production with all AVAILABLE resources, technology, social constraints

** IPP is ALWAYS INSIDE the PPP*