Basics of Economics
What is scarcity?
The assumption that all resources are finite.
Name one factor that can affect the demand curve.
Taste, related goods, consumer count, expectations
Name one factor that can affect the supply curve.
Materials cost, expectations, technology
What's the difference between positive & normative economics?
Positive is used to explain existing events, normative is used to discuss what SHOULD happen in the future.
What is demand?
The amount of a good buyers are willing and able to purchase.
What is supply?
The amount of a certain good suppliers are willing and able to sell at a certain price.
What is Pareto efficiency?
An outcome where nobody's situation can be improved without worsening somebody else's.
What's the difference between a demand curve and demand schedule?
A demand schedule is a representation of the data as a table, while the demand curve is a graphical representation.
What is the law of supply?
A higher price means vendors are willing to supply more.
If a fisherman trades 3 tuna (50 cents each) for a salmon ($2.00 each), with someone who can use the tuna to catch better fish, what fundamental economic concept is demonstrated?
Gains from trade
If the demand for a certain good goes down, which way does the demand curve shift?
Left
Explain how an increase in the price of car tires affects the supply AND demand for motorcycles.
Supply - not necesarily affected
Demand - goes up
Assume you choose to spend 2 hours studying for your math test instead of spending 2 hours playing video games. What fundamental economics are on display here? List at least three, with rationale.
1. Scarcity - Time is finite
2. Trade-Offs - The decision being made
3. Opportunity Cost - Not getting to play video games
4. Rationality - School > Games
Based on the knowledge provided by the presentation, explain how expectations can affect demand! We already know how they affect supply.
Consumers expect the price of Good X to go down, so they wait to buy it until the decline in price happens. This means that the present demand for the good goes down.
How do you calculate the market curve for supply of a certain good?
Add each supplier's supply curves together at each point.