Bell Ringer
Grab Your Clickers
Demand increases
(curve shifts right)
When:
Income
P sub
P comp
# buyers
Consumers expect P soon
Affects buyer!!!
Supply increases
(curve shifts right)
When profits
When:
Input costs
Productivity
Technology
Business taxes
# sellers
Gov’t regulations
Affects seller!!!
1.
Marginal cost of workers is
$276. How many workers should be hired?
A) 11
B) 12
C) 13
D) 14
E) 15
# Workers Total Revenue
10 $1150
11 $1450
12 $1700
13 $1865
14 $1950
15 $1998
A)
If the price of iPods
B) goes down, how will this affect the supply and/or Q supplied of C) iPods?
D)
A)
If the price of pepperoni goes up,
B) how will this affect the supply and/or Q C) supplied of pizza?
D)
A)
If corporate tax rates
increase, how will
B) this affect the supply and/or Q supplied of
products made by corp.’s?
C)
D)
A)
Two new companies start making flat screens. How will
B) this affect the supply and/or Q supplied of flat
C) screens?
D)
A)
An advance in insecticide technology allows for greater cotton
B) yields. How will this
affect the supply
C) and/or Q supplied of cotton?
D)
I. Fundamental Concepts
Scarcity= unlimited wants but limited resources
4 Factors ( L L C E), 3 Q’s (What, How, For Who?)
Opportunity Cost: next best alternative
Specialization = doing 1 thing
Division of Labor = break big job up into small jobs
Buyer & seller both gain from voluntary exchange .
Productivity-relationship of outputs to inputs
Add more as long as MR>MC.
1) What is the opportunity cost of
90 guns?
A) 90 butter C) 50 butter
B) 50 guns D) 90 guns
2) Which point represents resources that are available but are not being used?
A) A C) C
B) B D) D
3) Which point represents a level of production currently unattainable?
A) A C) C
B) B D) D
4)
5)
Command
I. Fundamental Concepts -
Continued
Freedom Security Equity Growth Efficiency Price
Stability
Employment
Market
_____]-------------------------------------------[________
Brazil U.S. France China N.Korea
6) Which economic system is better at the economic goal of security?
A) Traditional
B) Command
C) Mixed
D) Market
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II. Microeconomic Concepts
II. Microeconomic Concepts -
Continued
9) What do numbers 5 & 7 represent?
A) Consumer Spending
B) Goods & Services
C) Income
D) Land, Labor, Capital, Entrepreneurship
10) What do #’s 1 & 3 represent?
A) Consumer Spending
B) Goods & Services
C) Income
D) Land, Labor, Capital, Entrepreneurship
11) What do #’s 6 & 8 represent?
A) Consumer Spending
B) Goods & Services
C) Income
D) Land, Labor, Capital, Entrepreneurship
II. Microeconomic Concepts -
Continued
Demand increases
(curve shifts right)
When:
Income
P sub
P comp
# buyers
Consumers expect P soon
Affects buyer!!!
Supply increases
(curve shifts right)
When profits
When:
Input costs
Productivity
Technology
Business taxes
# sellers
Gov’t regulations
Affects sellerer!!!
II. Microeconomic Concepts -
Continued
Roles of money: med.of exchange , store of value , unit of measure
Supply & demand curves meet at equilibrium price & quantity
Price floors cause surpluses
Price ceilings cause shortages
Elasticity is sensitivity to price changes
Pet milk=elastic ;
Cigarettes=inelastic
12)
13) What is a surplus?
A) when Q supplied > Q demanded
B) when Q demanded > Q supplied
$3
14) What will result if the seller charges $2?
A) A surplus, because
Qs will be > Qd.
B) A shortage, because
Qs will be > Qd.
C) A surplus, because
Qs will be < Qd.
D) A shortage, because
Qs will be < Qd.
15) Which best describes a price floor?
A) Maximum price, causes shortage
B) Minimum price, causes surplus
C) Maximum price, causes shortage
D) Minimum price, causes surplus
16)
II. Microeconomic Concepts -
Continued
Corporationlimited liability, double taxation
Sole P. & Partnershipsunlimited (high) liability
Monopoly1 seller
OligopolyFew sellers, price leadership, interdependence
PerfectMany , Identical, No barriers
Monopolistic-Like perfect but product not identical
17)
18) It is easy to start a taxi-cab business, & there are a lot of them.
Some use nicer cars than others.
Some use hybrid cars. Fares vary somewhat between companies.
What kind of market structure best describes the taxi-cab business?
A) monopoly
B) oligopoly
C) monopolistic competition
D) perfect competition
III. Macroeconomic Concepts
GDP= C + I + G +(X-M)
(X-M) = Net Exports
GDP: $ value of all final goods/ services
CPI : measures INFLATION
Stagflation: recession+inflation
Structural , Cyclical , Frictional, Seasonal
Biz Cycle: Recession ( 6 mo’s- peak to trough),
Expansion
Debt : TOTAL owed
Federal deficit : expenditures > receipts in 1 yr
19) If U.S. citizens buy more
Colombian coffee, & all other spending stays the same, then
GDP…
A) goes up
B) goes down
C) stays the same
20) Which letter best represents a recession?
A) W
B) X
C) Y
D) Z
III. Macroeconomic Concepts -
Continued
Monetary policy : using $ supply & interest rates to help economy
Fed expands money supply with Bu.L.L.L.buying bonds (securities) , lower reserve req , lower discount rate , lower federal funds rate.
Fiscal policy : gov’t TAXING/SPENDING to help the economy
Countries should specialize in making what they have a comparative advantage in, & trading.
Tariff : tax on imports. Quota : limit on # of imports.
21) In an attempt to stimulate the economy, the government decides to spend more money on highway/road programs. This decision is a good example of:
A) Easy monetary policy
B) Tight monetary policy
C) Fiscal Policy
D) Contractionary Policy
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IV. International Economics
Absolute Advantage: I can produce more with same amount of resources.
Comparative Advantage: I can produce at a lower opportunity cost than you.
When we specialize in what we have a comparative advantage in, and trade,
EVERYONE benefits.
Exchange rates: strong dollar good for buyers of foreign goods, bad for U.S. sellers. A weak dollar means more exports & economic growth.
V. Personal Finance Economics
Spread: interest charged minus interest paid
Low risk = low return
Bonds are LOANS
Mutual funds: corporations that buy stock in other corporations
Inflation HELPS borrower , HURTS lender
Progressive : higher income, higher rate (income tax)
Proportional : flat rate (Medicare)
Regressive : lower income, higher rate (sales tax)
Credit Rating- based mostly on payment history
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