Bell Ringer

1. Bell Ringer • Grab Your Clickers

2. Demand increases (curve shifts right) When: Income P sub P comp # buyers Consumers expect P soon Affects buyer!!! Supply increases (curve shifts right) When profits When: Input costs Productivity Technology Business taxes # sellers Gov’t regulations Affects seller!!!

5. 1. Marginal cost of workers is $276. How many workers should be hired? • A) 11 • B) 12 • C) 13 • D) 14 • E) 15 # Workers Total Revenue 10 $1150 11 $1450 12 $1700 13 $1865 14 $1950 15 $1998

6. If the price of iPods goes down, how will this affect the supply and/or Q supplied of iPods? • A) • B) • C) • D)

7. If the price of pepperoni goes up, how will this affect the supply and/or Q supplied of pizza? • A) • B) • C) • D)

8. If corporate tax rates increase, how will this affect the supply and/or Q supplied of products made by corp.’s? • A) • B) • C) • D)

9. Two new companies start making flat screens. How will this affect the supply and/or Q supplied of flat screens? • A) • B) • C) • D)

10. An advance in insecticide technology allows for greater cotton yields. How will this affect the supply and/or Q supplied of cotton? • A) • B) • C) • D)

11. Economics Study Guide

12. I. Fundamental Concepts • Scarcity=unlimitedwants 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.

14. 1) What is the opportunity cost of 90 guns? • A) 90 butter C) 50 butter • B) 50 guns D) 90 guns

15. 2) Which point represents resources that are available but are not being used? • A) A C) C • B) B D) D

16. 3) Which point represents a level of production currently unattainable? • A) A C) C • B) B D) D

17. 4)

18. 5)

19. Island scenario

20. Freedom Security Equity Growth Efficiency Price Stability Employ-ment Command Market I. Fundamental Concepts - Continued • _____]-------------------------------------------[________ • Brazil U.S. France China N.Korea

21. 6) Which economic system is better at the economic goal of security? • A) Traditional • B) Command • C) Mixed • D) Market

22. 7)

23. 8)

24. Parking lot in command economy

25. II. Microeconomic Concepts

26. II. Microeconomic Concepts - Continued

27. 9) What do numbers 5 & 7 represent? • A) Consumer Spending • B) Goods & Services • C) Income • D) Land, Labor, Capital, Entrepreneurship

28. 10) What do #’s 1 & 3 represent? • A) Consumer Spending • B) Goods & Services • C) Income • D) Land, Labor, Capital, Entrepreneurship

29. 11) What do #’s 6 & 8 represent? • A) Consumer Spending • B) Goods & Services • C) Income • D) Land, Labor, Capital, Entrepreneurship

30. Demand increases (curve shifts right) When: Income P sub P comp # buyers Consumers expect P soon Affects buyer!!! Supply increases (curve shifts right) When profits When: Input costs Productivity Technology Business taxes # sellers Gov’t regulations Affects sellerer!!! II. Microeconomic Concepts - Continued

31. II. Microeconomic Concepts - Continued • 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

32. 12)

34. 13) What is a surplus? • A) when Q supplied > Q demanded • B) when Q demanded > Q supplied

35. 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. $3

36. 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

37. 16)

38. 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

39. The Prisoner’s Dilemna

40. Dueling Gas Stations

41. Soda Oligopoly

42. 17)

43. 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

44. III. Macroeconomic Concepts • 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

45. 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

46. 20) Which letter best represents a recession? • A) W • B) X • C) Y • D) Z

47. III. Macroeconomic Concepts - Continued • 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.

48. 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

49. 22)

50. 23)