Notes (1/20/15)
 Expansionary (growth)- real output in the economy is increasing and the unemployment rate is declining. (If you see a construction)

Peak- real output is at its highest point.

Contraction (recession)- real output in the economy is decreasing and the unemployment rate is rising

Trough- reach your lowest point on GDP.

The business class

• average cycle is 6 years
• Recessions last about 14 months
• The bulk of a cycle is the growth stage

o Peak: trough are meaningless because we never know we are in one until it's over
o If a recession loses more than 10% of real GDP; then it is a depression
o Trough means the end of a recession

Notes (1/16/15)
Surplus
QS>QD
Quality supply is greater then quality demanded

Shortage
QD>QS
Quality demanded is greater then quality supply

Equilibrium- the point in which supply and demand  intersect
- At this point, resources are used efficiently
Disequilibrium- when it's not used efficiently

Price ceiling- government imposed price control on how high a price can be changed for a product or service

Price floor- a government imposed price control on how low someone can change for a product or service

Total revenue= PxQ

Marginal revenue- the additional income from selling more units of a good

Fixed cost- cost that does not change no matter how much is produced
Ex.: rent, mortgage, and insurance etc

Variable cost- a cost that fluctuates or changes ( does depend on how much is produced)
Ex.: gas, cell phone bill,etc

Marginal cost- a cost of producing one more unit of a good

New TS – old TS

Formulas
TC= TFC+TVC
AFC= TFC/Q
AVC= TVC/Q
ATC= AFC+AVC or TC/Q

Notes (1/14/15)
Price elasticity of demand- it tells how drastically buyers will cut back or increase their demand for a good when prices rise or fall

3 types
Elastic demand- when demand changes greatly due to a change in price, your wants. (E is greater than 1).
Inelastic demand- demand will  or change even if the price changes (E is less than 1).
Unit or unitary elastic- E is equaled to 1

Steps:
1. Percentage change in quantity (new quantity minus old quantity divided by old quantity)
2. Percentage in price (new price minus old price divided by old price)
3. Price elasticity of demand, PED (  percentage  change in quantity divided by percentage change in price)

(1/15/15) – finding the equilibrium price

Demand
Demand curve

It is the qualities that people are willing and able to buy at various  prices

Only thing that could cause a change in quantity demanded is a change in price

Determinants
1. Change In buyers taste
2. Change in # of buyers
3. Change in income
• Normal goods- foods that buyers buy more of when income rises
• Inferior goods- goods that buyers buy less of when income rises
4. Change in price of related goods
• Substitute good- goods that serve purpose of buyers
• Complimentary goods- goods that are often consumed together
5. Change in expectations

Supply

 

Supply curve

It is the quantities that producers/sellers are willing and able to produce/sell at various prices

Only thing that can cause a change in quantity supplied is change in price

Determinants 

1. Change in weather

2. Change in technology 

3. Change in cost of production

4. Change in taxes or subsidies 

5. Change in # of sellers

6. Change in expectations

Notes January 7th, 2015
Macroeconomics- the study of the whole economics
Microeconomics- the study of parts of the economy (small impacting organizations in making decisions on the allocation of limited resource.)

Positive economic (fact)- claims that a attempt to describe the world as is. Very descriptive
Ex. Minimum wage laws causes unemployment
 Normative economic (opinion)- claims that attempt to prescribe what the world should be
Ex, the government should raise the minimum wage.

Needs- basic requirements for survival
Wants- desires of citizens, much broader then your needs.

Scarcity- the most fundamental economic problem that all societies face. Satisfy unlimited wants with unlimited needs.
Shortage- situations when quantity demand is greater then quantity supply Goods- tangible materials o Consumer goods- that are intended for final use by the consumer (candy bars, vehicles etc)
 o Capital goods- items used in the creation of another good Services- work that is preformed (janitor, stripper etc)

 Factors of production
1. Land- natural resources
 2. Labor- work force
3. Capital
  Human- knowledge and skills gained through work and education
  Physical- human made objects used to create other goods and services ( ex. Buildings, tools. Machinery etc)
 4. Entrepreneurship
  Innovation
 Risk taker

 Trade-offs – alternatives that we give up whenever we choose one course of action over another Opportunity cost- the most desirable alternative given up by making a decision (like not getting your first choice) 
“Guns or butter”- military or agriculture ( the government spends mostly on military)

 Production possibility graph (PPC or PPF)- shows alternative ways to use resources
 Always want to be on the curve
 Point D is underutilization and attainable but inefficient o Can be caused by: recessions, war/famine, underemployment, population loss, or unemployment resources
Point E is unattainable o Can be caused by: economic path, technology, or discovered new resources Point B is efficient and attainable
Point A and C are also both efficient but the production of different items are not evenly produced. Population possibilities graphs 1 key assumptions:
 1) Two goods are produced
2) Fall employment
 3) Fixed resources (land, labor, capital)
 4) Fixed state of technology
 5) No international trade