January 11, 2017 - Elasticity of Demand

10:08 AM


Elasticity of Demand

Elasticity of Demand - A measure of how consumers react to a change in price
Elastic Demand - Demand that is very sensitive to change in price
- Product not a necessity
- Available substitutes
- It is greater than 1
- Ex: Steak, clothes and soda

Inelastic Demand - Demand that's not sensitive to a change in price
- Product is a necessity
- Few to no substitutes
- It is less than 1
- Ex: Gas and insulin

Unitary Elastic - It is equal to 1

2017

January 10, 2017 - Macroeconomics Quiz Notes

9:07 AM

(Just as a disclaimer, these are not notes that were given in the AP class, these are just notes I typed and prepared for a quiz)

Macroeconomics Notes - Quiz (1/10/17)
Factors of Production - Land, Labor, Capital and Entrepreneurship
  • Land - Includes any natural resource used to produce goods and services. Includes not just land, but anything that comes from land like water,oil, coal.
  • Labor - The effort that people contribute to the production of goods and services. Like being paid for a service or creation of something.
  • Capital - The machinery, tools and buildings that humans use to contribute to the production of goods and services.
  • Entrepreneurship - A person who combines the other factors of production (land, labor, capital) to earn a profit.The most successful are innovators who find new goods and services to bring to the market.
Normative vs. Positive Statements
Positive - The attempt to describe the world as it is and is very descriptive and collects/presents facts.
Normative - Attempts to prescribe how the world should be and is opinion based, so it cannot be proved or disproved.
Scarcity vs. Shortage
Scarcity - A naturally occurring limitation on the resource that cannot be replenished. The most fundamental economics problem facing all societies.
Shortage - A market condition/state of a particular good at a particular price. When demand exceeds quantity available.
Trade-off vs. Opportunity Cost
Trade Off - Involves a sacrifice that must be made to get a certain product or experience
Opportunity Cost - When the most potential alternative is lost as a result of a decision

Law of Increasing Opportunity Costs - A principle that states that once all factors of production (land, labor, capital) are at maximum output and efficiency, producing more will cost more than average. As production increases, the opportunity cost does as well.

2017

January 9, 2017 Notes - Supply and Demand

8:02 PM

Supply and Demand

 Demand
(An example of a Demand Schedule and Demand Curve)

Demand - The quantity’s that people are willing and able to buy at various process.
Law of Demand - There is an inverse relationship between price and quantity demanded.

What causes a “change in quantity demanded”?
A: Change in price

What causes a “change in demand”?

  1. Change in number of buyers (population)
  2. Change in buyers taste
  3. Change in income
  • Normal goods   - Inferior goods
     4. Change in price of related goods
  • Substitute goods   - Complementary goods
     5 - Change in expectations (future)
Supply

Supply: The quantities that producers or sellers are willing and able to produce and sell at various prices.

The Law of Supply: There is a direct relationship between price and quantity supplied.
But what causes a change in quantity supplied? Again, a change in price.

What causes a change in supply?

1. Change in number of sellers
2. Change in cost of production
3. Change in technology
4. Change in taxes or subsidies
5. Change in weather
6. Change in expectations

Image result for possibilities graph

2017

January 4, 2017 Notes - Factors of Production

7:48 PM

Factors of Production
Factors of Production - Land, Labor, Capital and Entrepreneurship
  • Land - Includes any natural resources used to produce goods and services.
  • Labor - The effort that people contribute to the production of goods and services.
  • Capital - The machinery, tools, and buildings that people use to contribute to the production of goods and services.
A - Human Capital: When people acquire skills and knowledge through experience and education.
B - Physical: Consists of money, tools, buildings, equipment and machinery
  • Entrepreneurship - A person who combines the other factors of production (Land, Labor, Capital) to earn a profit. Most are innovators and risk takers.
Trade offs - An alternative we sacrifice when we make a decision.
Opportunity Costs - When the most desirable alternative is lost as a result of a decision.
Guns or Butter - Trade-offs the government makes when choosing whether to produce more or less military/consumer goods.
Thinking at the Margins - Deciding whether to add or subtract one additional unit of some resource.
Production Possibilities Graph - Graph that shows alternative ways to use an economy’s resource.
Efficiency - An economic state in which every resource is optimally allocated to serve each individual or entity in the best way while minimizing waste and inefficiency.
Inefficiency - The opposite of economy efficiency
Under utilization - Leads to decreased profits.
4 Key Assumptions

  1. Only 2 goods can be produced
  2. Full employment of resources
  3. Fixed resources (factors of production)
  4. Fixed technology

Image result for factors of productionImage result for factors of production

2017

January 3, 2017 Notes - Basic Concepts of Economics

9:05 AM

Basic Concepts of Economics


1. Macroeconomics - The study of the economy as a whole.
   Microeconomics - The study of factors and effects and how decisions affect the economy.

2. Positive Economics - The attempt to describe the world as it is. It is very descriptive and collects/presents data.
   Normative Economics - These statements attempt to prescribe how the world should be and is very subjective (opinion based).

3. Needs - Basic requirements for survival
   Wants - Desire; materialistic wants

4. Scarcity - The most fundamental economic problem facing all societies
   Shortage - When quantity demanded exceeds quantity supplied/available

5. Goods - Tangible commodities that can be bought, sold, traded and produced.
  • Capital Goods: Items used in the creation of other goods.
  • Consumer Goods: Goods intended for final use by the consumer.
  • Services - Work performed for someone.

Begining of AP Macroeconomics Notes

6:52 AM

This will be the first to come of many handwritten AP Macroeconomics notes that will be worth 1 semester of notes starting from January 3, 2017 and ending around late May 2017. These notes can also be used to study for the Macroeconomics AP exam.

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