Ap Econ Review
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This document summarizes key concepts in macroeconomics including: 1. It defines GDP as the total value of goods and services produced domestically over a period of time and explains how GDP is calculated using the expenditure approach. 2. It discusses different types of unemployment like frictional, seasonal, structural, and cyclical unemployment and how the unemployment rate is calculated. 3. It introduces the concepts of the consumption function, marginal propensity to consume, savings function, and multiplier effect which show how consumption and savings impact aggregate demand.
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The production possibility frontier (PPF) shows the maximum combinations of goods an economy can produce with limited resources. It is typically drawn as a curved line representing diminishing returns. Points inside the PPF indicate inefficient resource allocation, while points outside require new technologies or resources. Shifts in the PPF occur due to changes in productivity, resources, or technology. The opportunity cost of producing more of one good is giving up production of the other good.
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This document provides an overview of key microeconomics diagrams and concepts for the AS Economics exam. It includes definitions and illustrations of production possibility frontiers (PPF), demand and supply curves, equilibrium analysis, price elasticities, market failures, and government policies like taxes and subsidies. The document is a study guide for students preparing to take the AS Economics exam. It aims to clearly define important microeconomics terms and graphically depict the relationships between variables like price, quantity, demand, and supply.
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1) Regional economic integration can take various forms from free trade areas to full economic unions.
2) Trade creation occurs when tariffs are reduced or eliminated, allowing imports from lower cost partners which increases welfare. Trade diversion happens when preferential treatment is given to higher cost partners within an integration group, reducing welfare by diverting trade away from more efficient suppliers.
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Students should be able to:
Understand and distinguish between productive and allocative efficiency
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The document provides an overview and outline of topics covered on the AP Macroeconomics exam, including:
- Basic economic concepts such as scarcity, opportunity cost, and production possibilities frontier.
- Economic systems such as command, market, and mixed economies as well as allocative efficiency.
- Microeconomic topics including supply and demand, equilibrium, and government policies.
- Macroeconomic measurement including GDP, inflation, unemployment, and economic growth.
- Fiscal and monetary policy, money and banking, aggregate demand and supply, and international trade.
The exam format is outlined as 60 multiple choice questions in 70 minutes on definitions, analysis, and synthesis plus 3 free response questions worth 33.
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- National income is the total income in a nation and can increase (economic growth) or decrease (recession).
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I. Basic economic concepts like scarcity, opportunity cost, and production possibilities frontier.
II. Economic systems such as command, market and mixed economies as well as concepts like allocative and productive efficiency.
III. Supply and demand including determinants, equilibrium, price ceilings and floors, and government policies.
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VI. Costs of production including the production function, total, average and marginal costs.
VII.
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This document discusses key concepts related to national income accounting and measuring gross domestic product (GDP). It defines GDP as the total market value of all final goods and services produced within a country in a given period. GDP is measured by summing the value added at each stage of production or considering the final value of sales. GDP has four components: consumption spending, investment spending, government spending, and net exports. There are challenges to accurately measuring GDP, such as double counting, difficulties valuing non-market goods and services, and accounting for changes in quality of life and the environment.
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Here is a sample answer to this question "Evaluate the impact of changes in price on consumer surplus".
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The circular flow diagram shows the flow of money between households and firms through input and output markets. Firms purchase inputs from households and sell outputs to households. Households purchase goods and services from firms using income received from supplying inputs.
Elasticity measures the responsiveness of quantity demanded or supplied to a change in its price. Elastic demand means quantity demanded changes proportionally more than a price change. Inelastic demand means quantity demanded changes less than proportionally to a price change.
Consumer choice is based on utility maximization subject to a budget constraint. Indifference curves illustrate combinations of goods that provide equal utility. Utility maximizes where the highest indifference curve is tangent to the budget constraint.
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The document discusses market power and pricing strategies in various industries. It provides examples of market share concentrations in UK retail banking, with the top 5 banks holding 85% of the market. It also examines factors that give firms market power like entry barriers, economies of scale, and influence over regulators. The document then discusses concepts of economic efficiency including allocative, productive, and dynamic efficiency. It analyzes pricing strategies like price discrimination and how they can be used to segment markets. Finally, it considers factors that may explain falling smartphone prices such as intense competition, emerging markets, and satisficing consumer behavior.
Lecture1 2010 edt
This document provides an overview of an introductory economics lecture covering basic concepts like scarcity, opportunity cost, demand and supply, and market equilibrium. The lecture introduces micro and macroeconomics and outlines the course structure. Key concepts are defined, including utility, production possibilities frontier, demand and supply determinants, and shifts in demand and supply curves. Controls on prices like price ceilings and floors are also introduced along with their impacts on markets.
Monopoly
1. The document discusses market structures, specifically monopoly, including monopoly assumptions, barriers to entry, production decisions, and profit maximization.
2. A monopoly faces the entire market demand curve and can set price above marginal cost to earn profits in both the short- and long-run.
3. While monopolies may lead to economic inefficiency through deadweight loss, a price-discriminating monopoly can help reduce this loss by segmenting customers and charging different prices.
Vocab
This document defines key economic terms across microeconomics and macroeconomics. It covers topics such as positive and normative economics, demand and supply, elasticities, costs of production, profit maximization, and market structures. Specifically, it defines scarcity, factors of production, the production possibility curve, economic growth, price ceilings and floors, income and cross elasticities, fixed and variable costs, short and long run periods, laws of returns, and revenues.
Chap18
Businesses must consider several factors when setting international prices:
1) Costs such as export costs, foreign currency exchange rates, and taxes.
2) Consumer demand which is affected by factors like income levels and competition.
3) Competition from other companies selling similar products.
Pricing methods used include markup pricing, new product pricing, and discount pricing which provides incentives.
Setting prices that account for currency fluctuations and using methods like countertrade can help minimize financial risks in global markets.
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Ap Econ Review
- 1. AP Econ Quarter Review Kennedy
- 15. Macroeconomic Measures of Performance
- 16. The Circular Flow Model
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