Eco2013

1. Chapter 1

a. Definition of Economics: expectational psychology

b. An economic person is driven by rational self interest

c. Know the difference between macro and micro:

i. Macro – Broader

ii. Micro - Details

d. An economic person is driven by rational self interest

e. Economics is the least cost combination that will meet the demand

f. Scarcity is a core problem of economics

g. Ceteris paribus – all things being equal or constant

h. Models help an economist organize his theory

i. Know how to measure the slope of the curve in a model: (Y2-Y1)/(X2-X1)

j. Rent is income that land generates

k. Labor is a factor of production

l. Capital is good used to produce other goods

m. Entrepreneurship – assembling resources to produce a new or improved good or service

n. Three basic economic questions:

i. What to produce with limited resources?

ii. How to produce the goods and services we select?

iii. For who should the goods and services are produced?

o. Opportunity cost: The highest value opportunity given up by choosing something else

p. Law of increasing opportunity cost: Sacrificing the production of one good to produce more of another

q. Market failure: Left unregulated, would fail to provide the right outcome

r. Supply: the least cost combination that will meet the demand

s. Economic growth: shifting the curve outward – “increase in real output”

2. Chapter 2

a. GDP – market value of all new final goods and services produced in our borders each calendar year

b. GDP is the most important economic indicator

c. Our economy is very high tech

d. Types of goods:

i. Durable – toasters

ii. Services – wait staff

iii. Nondurable – apples and oranges

e. Exports minus imports = net exports

f. Different Business types:

i. Sole...