- Information
- AI Chat
Chapter 2
Microeconomics
Taylor's University Lakeside Campus
Students also viewed
- Chapter 1
- Jazaria - Umbak Properties just paid a dividend of $2.53 per share on its stock. The dividends
- Orange Green Blue Colorful 5 Reasons To Use Informational infographic
- Split Doc 503 - Summary Guyton e Hall - Fisiologia medica 13 ed.
- Split Doc 492 - Summary Tratado de fisiologia Medica
- Split Doc 493 - Summary John D. Rockefeller - The Original Titan
Related Studylists
econ202Preview text
Tutorial 2 Summary Part 1: PPF Recall: scarcity forces us to choose between options. Choosing an option → tradeoff and opportunity cost. o Problem: how to show tradeoff and opportunity cost using a diagram? Answer: PPF PPF: a curve that shows all possible combinations of the production of 2 goods when all resources / FOP are fully used / perfectly allocated o To increase the production of 1 good → need to reduce the production of another good → opportunity cost arises 3 usual shapes of PPF curve: o Constant opportunity cost = linear PPF (straight line) o Increasing opportunity cost = concave PPF (bowed outward) o Decreasing opportunity cost = convex PPF (bowed inward) Example: Learning a new skill What is economic growth and how to show economic growth using PPF? o Economic growth: increase in total productions / outputs o Economic growth can be shown by shifting the PPF curve outward equally on both axes or just on 1 axis. Part 2: Market system (Circular Flow of Income) Market system: a simple diagram showing the flow of money / income for all transactions. Involve economic sectors / agents / participants like Household (representing people with factors of production) and Firm (representing businesses that produce and sell goods and services / outputs to household). o Household sector buys goods and services in goods market and sells FOP in factor market o Firm sector buys FOP in factor market and sells goods and services in goods market Can be illustrated with the circular flow of income diagram Recall: free market: transactions between household and firm sectors with minimal govt restrictions. o For free market to work, property rights must be enforced by govt. Property rights: the rights to own, use and transact their properties / assets.
Tutorial Answers Question 1 Positive: a & b Normative: c, d & e Question 2 a. & b. c. 9 cotton candy stands Question 3 a. “Bowed out” – increasing marginal opportunity costs (students need to explain the details). b. Scarcity – explain the movement along the curve (e. from pt. W to pt. X). Tradeoff – the idea or the action of choosing one position over another (e. from pt. W to pt. X). c. Points which are - Attainable inside and on the frontier, Y, W X (available resources) - Unattainable, points outside the frontier (no resources available) - Efficient, on the frontier, W & X (resources fully utilized) - Inefficient, inside the frontier, Y. (resources not fully utilized) d. No opportunity cost since resources are not fully utilized. No, you can have more production instead of less. e. 5 million tons of paper forgone to produce 3 million tons of steel f. Identify the factors and provide inward/outward shift specifically on factors chosen - technological advancement, migration, population growth, resources, productivity, etc.
Chapter 2
Course: Microeconomics
University: Taylor's University Lakeside Campus
Students also viewed
- Chapter 1
- Jazaria - Umbak Properties just paid a dividend of $2.53 per share on its stock. The dividends
- Orange Green Blue Colorful 5 Reasons To Use Informational infographic
- Split Doc 503 - Summary Guyton e Hall - Fisiologia medica 13 ed.
- Split Doc 492 - Summary Tratado de fisiologia Medica
- Split Doc 493 - Summary John D. Rockefeller - The Original Titan