Transcript Economics Study Guide - Effingham County Schools

Bell Ringer
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Grab Your Clickers
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Demand increases
(curve shifts right)
When:
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Income
P sub
P comp
# buyers
Consumers expect P
soon
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Supply increases
(curve shifts right)
When profits
When:
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Affects buyer!!!
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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
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# Workers
Total Revenue
10
$1150
11
$1450
12
$1700
13
$1865
14
$1950
15
$1998
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A)
If the price of iPods  B)
goes down, how will
this affect the supply
and/or Q supplied of  C)
iPods?
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D)
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A)
If the price of
 B)
pepperoni goes up,
how will this affect
the supply and/or Q  C)
supplied of pizza?
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D)
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A)
If corporate tax rates
 B)
increase, how will
this affect the supply
and/or Q supplied of
 C)
products made by
corp.’s?
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D)
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A)
Two new
companies start
 B)
making flat
screens. How will
this affect the  C)
supply and/or Q
supplied of flat
 D)
screens?
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A)
An advance in
insecticide
 B)
technology allows
for greater cotton
yields. How will this
 C)
affect the supply
and/or Q supplied of
cotton?
 D)
Economics Study Guide
I. Fundamental Concepts
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Scarcity=unlimited wants but limited resources
4 Factors (LLCE), 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
 B) 50 guns
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C) 50 butter
D) 90 guns
2) Which point represents
resources that are available but are
not being used?
A) A
 B) B
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C) C
D) D
3) Which point represents a level of
production currently unattainable?
A) A
 B) B
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C) C
D) D
4)
5)
Island scenario
I. Fundamental Concepts Continued
Freedom
Security
Equity
Growth
Efficiency
Price
Stability
Employment
Command
Market
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_____]-------------------------------------------[________
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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8)
Parking lot in command
economy
II. Microeconomic Concepts
II. Microeconomic Concepts Continued
9) What do numbers 5 & 7 represent?
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A) Consumer Spending
B) Goods & Services
C) Income
D) Land, Labor, Capital, Entrepreneurship
10) What do #’s 1 & 3 represent?
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A) Consumer Spending
B) Goods & Services
C) Income
D) Land, Labor, Capital, Entrepreneurship
11) What do #’s 6 & 8 represent?
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A) Consumer Spending
B) Goods & Services
C) Income
D) Land, Labor, Capital, Entrepreneurship
II. Microeconomic Concepts Continued
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Demand increases
(curve shifts right)
When:






Income
P sub
P comp
# buyers
Consumers expect P
soon
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
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Supply increases
(curve shifts right)
When profits
When:
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Affects buyer!!!
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Input costs
Productivity
Technology
Business taxes
# sellers
Gov’t regulations
Affects sellerer!!!
II. Microeconomic Concepts Continued
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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
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13) What is a surplus?
A) when Q supplied > Q demanded
 B) when Q demanded > Q supplied
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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.
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$3
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
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II. Microeconomic Concepts Continued
Corporation-limited liability, double taxation
 Sole P. & Partnerships-unlimited (high) liability
 Monopoly-1 seller
 Oligopoly-Few sellers, price leadership,
interdependence
 Perfect-Many, Identical, No barriers
 Monopolistic-Like perfect but product not
identical
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The Prisoner’s Dilemna
Dueling Gas Stations
Soda Oligopoly
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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
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III. Macroeconomic Concepts
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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
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20) Which letter best represents a
recession?
A) W
 B) X
 C) Y
 D) Z
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III. Macroeconomic Concepts Continued
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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
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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.
Cell Phone/Microwave
Activity
V. Personal Finance Economics
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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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