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How do you calculate the unemloyment rate?
Take the number employed % number umemployed + employed (Labor Force)
Calculate Price Elasticity of Demand using Midpoints Formula
|Q2-Q1 % Q2+Q1| % |P2-P1 % P2+P1|
Define Opportunity Cost.
The cost of the next best forgone alternative.
Articulate the characteristics of Elasticity.
E-shape in graph, Luxuries, Absoulte Value >1, Substitutes, Time, Income % of buyers,
Coupons.
Articulate the characteristics of Inelasticity.
I-shape in graph, Necessities, Absolute value < 1, Few substitutes, short time, small % of
income of buyers, price same as revenue
How to calculate equilibruim price?
Set supply equation equal to the demand equation.
What does economic growth prevent against?
Recession and Depression
What is used to measure economic growth?
GDP, Real GDP, Real GDP per capita.
What does price stability prevent against?
Inflation and deflation.
What is used to measure price stability?
CPI, Core Rate CPI, PPI, GDP Price Deflator
What does high employment prevent against?
High unemployment
What is used to measure high employment?
Employment rate, and initial jobless claims with a 4 week moving average
How does one find the profit maximizing points on a graph?
Find where MR=MC to find the $ max. output (quantity), then draw straight up to where it meets
the demand curve to find $ max price.
What is the precise class defnition of economics?
The study of how we attempt to satisfy unlimited wants with limited resources
What is the book definition of economics?
The scientific study of the production, distribution and consumption of economic goods and
services.
What is 'macroeconomics'?
decisions made to: encourage economic growth, achieve price stability and accomplish low
unemployment.
What is the goal of macroeconomics?
To ecpand the economy and improve the standard of living while maximizing profit across econ
units.
What is 'microeconomics'?
decisions made by: households, firms and industries.
What is the goal of microeconomics?
to maximize shareholder wealth and stakeholder utility while maximizing utility within
econ units.
What is the law of demand?
All things being equal...as price goes up, quantity demanded goes down. As price goes down,
quantity demanded goes up.
What are the determinants of demand?
Preferences/Tastes, Related Goods, incomes of buyers, count of buyers, and expectations
for future price changes.
What are the determinants of supply?
Production technology, prices of related goods, costs of resources, number of sellers and
expectations for future changes in demand.
What are the factors of production?
Capital, Entrepreneurship, Land, Labor
How is Capital paid?
Interest
How are Entrepreneurs paid?
Profit
How are Landowners paid?
Rent
How is Labor paid for?
Wages
Identify the 3 types of unemployment
Structural, Cynical and Frictional
Describe structural unemployment.
a mismatch in either skill or geography.
Describe cynical unemployment.
unemployment due to changes in the business cycle.
Describe frictional unemployment.
Voluntary unemployment
What are the 5 key components of the expidenture model of GDP [GDP= C + I + G + (X-M)]
Consumption + Investment + Government + (Exports - Imports).
What is the law of supply?
All things being equal...as price goes up, quantity supplied goes up. As price goes down,
quantity supplied goes down.