1. Elasticity of Demand Graph
2. Production Possibility Model - Economy makes two products. -Resources and technology are fixed. -Resources are employed to their fullest capacity.
2.1. Production Possibility Curve - Highlights scarcity of resources. -Has a concave shape, reflects the law of increasing opportunity costs.
3. Basic Economic Questions - What to produce. - How to produce. - Produce for who.
3.1. Economic Goals - Economic efficiency. - Income equity. - Price stability. - Full employment. - Viable balance of payments. - Economic growth. - Environmental sustainability.
3.1.1. Positive Statements - Scientific statements about economic behaviour. - "What is".
3.1.1.1. Economic Model - Simple economic reality. - Inverse relationship.
3.1.2. Negative Statements - Value based. - "What should be".
4. Opportunity Cost - The cost of choosing one thing over another. - The utility of the best forgone alternative.
4.1. Law of Increasing Opportunity Costs - As the quantity of something rises so does its opportunity cost.
5. Elasticity of Demand = percent change demand/percent change price
5.1. Inelastic Demand - Percent change in quantity demanded is less than percent price change.
5.1.1. Perfectly Inelastic - Vertical demand curve. - Price changes, demand stays the same.
5.1.2. Perfectly Elastic - Horizontal demand curve. - Price stays same, demand changes.
5.2. Unit Elastic - Percentages are the same.
5.3. Elastic Demand - Percent change in quantity demanded is more than percent price change.
5.4. Price Elasticty Determinants - Portion of consumer incomes. - Access to subsitutes. - Necessities versus luxuries. - Time.
6. Supply - A relationship between a products price and quantity supplied. - Law of supply states there is a direct relationship between price and quantity supplied.
6.1. Changes in Supply - Shown by shifts in supply curve. - Caused by changes in supply determinants.
6.1.1. Supply Determinants - Number of producers. - Resource price. - State of technology. - Prices of related products. - Change in nature. - Producer expectations.
7. Demand - A relationship between price and quantity of demand. - Price and quantity demanded are inversely related. - Market demand is the sum of quantities dmenaded by all consumers.
7.1. Changes in Quantity Demand - Shown by movements along the demand curve. - Caused by price changes.
7.1.1. Demand Determinants - Number of buyers. - Income increase/decrease. - Price of complimentary products. - Price of subsitute products. - Consumer preferences. - Consumer expectations.