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Portfolio 2

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Portfolio 2

  1. 1. Portfolio<br />Takahiro Kono<br />
  2. 2. Definitions<br />Cost Theory: the theory that the price of an object or condition is determined by the sum of the cost of the resources that went into making it<br />Revenue Theory: the change in total revenue earned by a firm that results from employing one more unit of labor<br />Profit Theory: The positive gain from an investment or business operation after subtracting from all expenses<br />Marginal Cost: Increase in total cost of producing an extr unit of output<br />
  3. 3. Total Costs: Total cost to produce a certain output TC=TFC+TVC<br />Total Variable Cost: Total cost of the variable assets that a firm uses in a given period of time<br />Total Fixed Costs: Total cost of fixed assets used in a given time period<br />Price Discrimination: When firms actively adjust prices according to the willingness/ ability of different consumers to pay<br />Macroeconomics: The Study of a national economy<br />GDP: Gross Domestic Product= Total value of all spending in an economy<br />
  4. 4. GNP: Gross National Product= Total income earned by a nation’s factors of production regardless of where the assets are located<br />Real GDP: Nominal GDP adjusted for inflation<br />Economic Development: A multidimensional concept that includes poverty reduction, provision of education, health care and law and order, civil liberties and civic participation<br />Aggregate Demand: The aggregate (total) spending on goods and service in a period of time at a given price level<br />Aggregate Supply: The amount of goods and services that all industries will produce at a given price level<br />Fluctuations in the growth of real output, consisting of periods of expansion and contraction called business cycles or trade cycles<br />
  5. 5. Recession: When the economy experiences two consecutive quarters of falling GDP<br />Neoclassical Perspective: Price mechanism regulates markets, full employment achieved without intervention, economy is an harmonious system, perfect competitive equilibrium is the benchmark<br />Keynesian Perspective: Price mechanism fails as wages are “downward sticky”, reaching full employment requires intervention, the economy is inherently unstable, the economy can get stuck in the SR<br />Fiscal Policy: Increase government spending, decrease personal and/or business taxes, combination of both policies<br />Monetary Policy: Increase money supply, lower interest rates (easy money) <br />
  6. 6. The Multiplier Effect: Any change in consumption, investment, government spending, and net exports. Prices induced expenditures, a chain reaction of further expenditures<br />Crowding-out Effect: Governments borrow to finance fiscal policy, interest rates rise, private investment fails<br />Unemployment: Number of adults who are not working but actively look for a job<br />Underemployment: Number of adults who are working part-time but looking for full time work or people who are not fully using their skills<br />Unemployment Rate: Number of unemployed as a percentage of the labor force<br />
  7. 7. Inflation: A continuing increase in the general price level of goods and service within the economy<br />Deflation: A continuing decrease in the general price level of goods and service within the economy<br />CPI (Consumer Price Index): Compares the value of a basket of goods and services in one year with a same basket in the base year<br />
  8. 8. Diagrams<br />
  9. 9. The Total Product Curve<br />
  10. 10. Average and Marginal Product Curves<br />
  11. 11. TFC, TVC, and TC<br />
  12. 12. Cost Curves<br />
  13. 13. LRAC<br />
  14. 14. Economies and Diseconomies of Scale<br />
  15. 15. Revenue Curves: Perfectly Esalstic Demand<br />Price<br />D=AR=MR<br />5<br />Output<br />
  16. 16. Relationship between D, AR, MR, TR, and PED for a Normal Demand Curve<br />
  17. 17. Shut Down Price<br />
  18. 18. Profit Maximizing Level of Output with Perfectly Elastic Demand<br />
  19. 19. Profit Maximizing Level of Output with Perfectly Elastic Demand<br />
  20. 20. Profit Maximizing Level of Output with Normal Demand<br />
  21. 21. Profit Maximizing Level of Output with Normal Demand<br />
  22. 22. Normal Profit Normal Demand<br />
  23. 23. Abnormal Profit Normal Demand<br />
  24. 24. Loss Normal Demand<br />
  25. 25. Profit, Sales, and Revenue Maximization<br />
  26. 26. Profit, Sales, and Revenue Maximization<br />
  27. 27. Price Discrimination Example Total Ticket Sales<br />
  28. 28. Price Discrimination Example Adult Tickets<br />
  29. 29. Price Discrimination Example Adult Tickets<br />
  30. 30. Productive Efficiency: Resources are not wasted<br />
  31. 31. Allocative Efficiency/ Socially Optimum Level of Output<br />
  32. 32. Perfect Competition Versus Monopoly<br />
  33. 33. Perfect Competition Versus Monopoly<br />
  34. 34. Aggregate Demand Curve<br />
  35. 35. Shifts in AD<br />
  36. 36. Demand for investment funds<br />
  37. 37. Aggregate Supply in the Short Run<br />
  38. 38. Shifts in SRAS<br />
  39. 39. Macroeconomic Equilibrium<br />
  40. 40. Shifts in AD<br />
  41. 41. Shifts in SRAS<br />
  42. 42. Business Cycle<br />
  43. 43. Using Diagrams to Illustrate Macroeconomic Goals<br />
  44. 44. Using Diagrams to Illustrate Macroeconomic Goals<br />
  45. 45. Changes in AD<br />
  46. 46. Changes in SRAS<br />
  47. 47. Deflationary (recessionary) Gap<br />
  48. 48. Inflationary Gap<br />
  49. 49. Full Employment Level of Output<br />
  50. 50. Changes in AD<br />
  51. 51. Changes in AS<br />
  52. 52. Neoclassical (Free Market) LRAS<br />
  53. 53. Long-run Equilibrium<br />
  54. 54. Long-run equilibrium and Decline in AD<br />
  55. 55. Return to Long-run equilibrium<br />
  56. 56. Long-run equilibrium<br />
  57. 57. Long-run equilibrium and Increase in AD<br />
  58. 58. Return to Long-run equilibrium<br />
  59. 59. Keynesian SR/LRAS<br />
  60. 60. Inflationary Gap in the Keynesian Perspective<br />
  61. 61. Full Employment Equilibrium in the Keynesian Perspective<br />
  62. 62. Economic Growth: Neoclasical Perspective<br />
  63. 63. Economic Growth: Keynesian Perspective<br />
  64. 64. The Multiplier Effect<br />
  65. 65. Crowding-out Effect<br />
  66. 66. Crowding-out Effect<br />
  67. 67. Demand-pull Inflation<br />
  68. 68. Cost-push Inflation<br />
  69. 69. “Good” Deflation<br />
  70. 70. Phillips Curve<br />
  71. 71. Phillips Curve<br />

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