Principles Of Macroeconomics Study Guide For Midterm

Front 1

Resource Price (a cost to the business) ↓; Opportunity Costs ↓; Profits ↑; Qx Supplied ↑

Back 1

Example: price of fertilizer drops; opportunity costs of producing the good drops; profit higher; corn production increases

Front 2

Resource Price (a cost to the business) ↑; Opportunity Costs ↑; Profits ↓; Qx Supplied ↓

Back 2

Example: a new wage contract boosts wages; opportunity costs of producing the good increases; less profit; less incentive

Front 3

Technology

Back 3

production methods used to combine, resources to produce goods and services.

Front 4

Technological advance

Back 4

increased productivity of resources, or, get more output per unit of input

Front 5

Advantages in Technological advances

Back 5

efficiencies are gained'; Opportunity Costs are reduced; more profit; more will be produced.

Front 6

Natural disasters can reduce Supply

Back 6

Hurricanes, drought, early freezes,

Front 7

Weather conditions can facilitate Supply

Back 7

Bumper crops, tourism increases

Front 8

Political events, can disrupt Supply

Back 8

Oil from the Mid-East, Cuban, cigars

Front 9

Political events can encourage Supply

Back 9

Deregulation of Trucking, Airlines

Front 10

Imposition raises Opportunity Cost of production; less Supply

Back 10

10% luxury tax on autos

Front 11

Reduction lowers Opportunity Cost of production; more Supply

Back 11

Reduced Capital Gains

Front 12

Market Supply is the sum of the Individual Supply Curves:

Back 12

a. One company selling Stereos in Trumbull County Qx = Qmarket
b. Two companies selling Stereos in Trumbull County Qx + Qy = Qmarket
c. Three 'companies selling Stereos 'in Trumbull County Qx + Qy + Qz = Qmarket

Front 13

Substitutes

Back 13

Py↑ Qx↑; Py↓Qx↓ Margarine and Butter, IBM & Compaq computers

Front 14

Complements

Back 14

Py↓ Qx↑; Py↑ Qx↓ Greens fees & golf balls, computers & floppy discs

Front 15

Normal Good

Back 15

Income↑ Qx↑ Income ↓ Qx↓ Travel, Appliances

Front 16

Inferior Good

Back 16

Income↑ Qx↓ Income ↓ Qx↑ Macaroni & cheese

Front 17

Expect a price increase

Back 17

Qx↑ in present time period "Buy now, beat the price increase"

Front 18

Expect a price decrease

Back 18

Qx↓ in present time period After-Christmas Sales

Front 19

Expect Income to rise

Back 19

Qx↑ in present time period College Seniors

Front 20

Expect Income to fall

Back 20

Qx↓ in present time period Expect being laid off

Front 21

Expect product to be available soon:

Back 21

CD players, new cars
Qx↓ in present time period

Front 22

Expect product won't be available in future

Back 22

Discontinued brands, oil in 1974
Qx↑ in present time period

Front 23

Product is "fashionable"

Back 23

Qx↑ $100 running shoes, NFL jackets

Front 24

Product is "unfashionable”

Back 24

Qx↓ Leisure Suits, 8-track tapes

Front 25

Market Demand is the sum of the Individual Demand Curves:

Back 25

a. Sell Stereos only in Trumbull County Qx Trumbull
b. Sell Stereos in Trumbull & Mahoning Counties Qx Trumbull + Qx Mahoning
c. Sell Stereos in Trumbull, Mahoning & Stark Qx Trumbull + Qx Mahoning + Qx Stark