COST OF PRODUCTION

• Total Revenue -the total amount of money of  a firm receives from selling goods and services 

• FIXED COST- a cost that does not change no matter how much of a good is produce

• VARIABLE COST- a cost that raises or falls depending upon how much is produce 

• MARGINAL COST-  cost of producing one more unit of a good 

                                          

SUPPLY 

the quantities that produce or sellers are willing and bale to produce at varies prices 

Price increase quantity increase vice versa 

What causes a change in quantity supplies 

1.change in expectations 

2.change in weather

3.change in # of suppliers

4.change in cost of production 

5.change in taxes or subsides 

6.change in tech.

DEMAND 

the quantities that people are willing and able to buy at varies quantities 

 

Elastic demand                                                             Inelastic demand

demand that is very sensitive to change in price E>1        demand that is not very sensitive to change E<1

 Price Elasticity of Demand(PED)

               1. calculate the quantity- New quantity - old quantity / old quantity

                              2. calculate the price- New price - Old price / old price

                              3.PED- % change in quantity/% change in price

What causes a change in demand 

1. change in price

2.change in buyers taste

3.change in # of buyers

4.change in the price of related goods

5.change in income

6.change in exceptions 

PRODUCTION POSSIBILITIES CURVE(PPC)

shows alternatives ways to use country resources  

4 assumption of a PPG          3 types of movements in PPC      What causes the PPC/PPF to Shift

1. two goods                         1.inside the PPC                          1.Technology change

2.Fixed resources                  2.Along the PPC                          2.change in resources

3.Fix technology                    3.Shifts of the PPC                      3.Economic growth

4.Technology efficiency                                                          4.change in the labor force

                                                                                                5.Natural disasters

                                                                                                6.More education 

 Moves left to right

when therea increase in tech. / economic growth vice versa(moves right to left)

FACTORS OF PRODUCTION

resources required to produce goods and services 

      

   1. LAND-Natural resources

   2. LABOR-Work force

   3.CAPITAL

         Physical -tools,machinery, etc

         Human- skills talent knowledge 

   4.ENTREPRENEURSHIP

        INNOVATIVE

                RISK TAKER

Trade offs- Alternatives that we give up whenever we chose open course of action over another 
Opportunity cost- best next alternative  

UNIT 1

Macroeconomics              V.       Miroeconomics 

  *Study of economy as a whole                       *Study of individual or certain units of the economy

       Ex. minimum wage , intention trade                        Ex.market structures

        supply & demand 

Positive economics v.     Normative economics 

   *claims that attempt to descried the world as is        *how the world should be 
Needs                      v.     Wants
*basic requirements for survival                                *desire
Goods                      v.    Services
*Tangible commodities                                            *Work done
1.CAPITAL
2.CONSUMER
Scarcity                    v.   Shortage
*most fundamental economic problem that                *quantity demand is greater than supply
all society faces