1. Supply
1.1. Willing & able to sell at certain P and time
1.2. LAW OF SUPPLY→ P goes up, Qs goes up
2. Opportunity cost
2.1. Someone’s next best alternative.
3. PPF
3.1. Growth
3.1.1. Project specifications
3.1.2. End User requirements
3.1.3. Action points sign-off
3.2. Increases output
3.3. More choices
4. Efficiency
4.1. Allocative: correct location of resources
4.2. Productive: + production using - resources as possible
4.3. Economic: mix of both
5. Demand
5.1. LAW OF DEMAND→ If P goes up, Qd goes down
5.1.1. Materials
5.1.2. Personel
5.1.3. Services
5.1.4. Duration
5.2. Willing & able to pay
5.3. Always negative
6. Factors of production
6.1. Land & resources (physical)
6.2. Labour (human)
6.3. Capital (financial)
6.3.1. KPI's
6.4. Enterprise (management)
7. Government Intervention
7.1. Taxes
7.2. Subsidies
8. Types of goods
8.1. Normal: higher response to consumer income
8.2. Substitute: changes respect other products
8.3. Inferior: consumer income increases, demand decreases
8.4. Superior: consumer income increases, demand increases
8.5. Complement: goods used together
9. Values
9.1. Price elasticity of demand (PED):
9.2. Price elasticity of supply (PES)-
9.3. Income Elasticity of demand (YED)-
9.4. Cross elasticity of demand (XED)-
10. Price Control
10.1. Price ceiling The government chooses to set a maximum price in a certain good, below the equilibrium price.
10.2. Price floor The government sets a minimum price for a certain good, above the market equilibrium price.
11. Surplus
11.1. Consumer surplus: spend less than you were willing and able
11.2. Producer surplus: receive more than expected
11.3. Social surplus: the sum of both
12. Theory of Firm
12.1. Cost theory
12.1.1. Short run → One factor of production is fixed. Length = time it takes to increase Q of fixed factor. Production is part of the short run.
12.1.2. Long run→ all factors of production variable. When fixed factors are changed short run starts again. Planning is part of it.
13. Marginal benefit
13.1. The benefit you get from the last increase in an unit of a certain product.
14. Costs
14.1. Explicit costs: directly related to production, direct payments for factors of production
14.2. Opportunity cost or Implicit cost: entrepreneur takes a risk to start the business
14.3. Economic cost: both together
14.4. Total cost: cost to produce all of a specified level of output
14.5. Average cost: cost per worker
14.6. Marginal cost: additional cost per additional unit of output
15. Marginal Cost
15.1. The change of the total cost for producing one more unit of certain product
16. Economies of scales: Falls in LRAC that come when firm alters all of its factors of production, in order to increase output.
17. Diseconomies of scale: Increases in LRAC that come when firm alters all of its factors of production, in order to increase output.
18. Monopoly: When only one firm has total control over the market.
19. Oligopoly: Has two or more firms dominating the market.
20. Externalities
20.1. Consumption Externalities→ (consuming causing positive/negative externality to a 3rd one)
20.1.1. Positive: If you consume you create welfare for others, for example hybrid cars, you help reduce contamination if you buy one. F.E.: free riding
20.1.2. Negative: Firms→ profiting maximizing→ government rectifies situation w/taxes→ MPC curve moves up
20.2. Production Externalities → (Costs of production must be paid by someone ≠producer of a good)
20.2.1. Positive: As a firm you benefit someone else while producing your product. Creating welfare
20.2.2. Negative: You damage someone else as a result of your production process. Is an implicit cost not taken into account. Having welfare loss.
21. Monopolistic Competition
21.1. Products are differentiated
21.2. Assumptions
21.2.1. many producers and consumers
21.2.2. no perfect substitutes
21.3. Productive efficiency
21.3.1. min. average cost unachieved
21.4. Allocative efficiency
21.4.1. Price> marginal cost
21.4.2. Price < monopoly’s