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Summary Economics 214 summaries

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Comprehensive, beautifully digitally summarised summaries for Economics 214. The summaries cover all the work needed for the A1 as well as extra revision. On the work plan, this is sections 13.1 up to and including 13.9. These summaries include all the information you need to do super well in...

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  • June 24, 2023
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justa littlenote

hi! thanks for purchasing my economics notes. I
really hope they help a lot with the studies.

note: the summaries are copyright, so please
don’t share - lots of time and effort goes into
making them .

the notes cover the most of the work plan,
including a good revision recap of first year
economics. please consult the textbook and
any other resources to get a full detailed
overview of the work for distinctions.

good luck with the studies we got this!

- Mia

, Chapter 1 andI OPPORTUNITY COST:

like an economistI and demand value whatyou lose when
Thinking supply of


chosing between 2
options.
Revision Oc return
=
on most profitable
investmentchoice return
scarcity problem: on
-
·




how
people make decisions under scarcity chosen investment




·
cost-benefit analysis:weighing up the costvs. the benefito fdoing something
some common
pitfalls:
·

ignoring implicitcosts, or the opportunity cost
ofan
activity:the value all
of


thatmustbe sacrificed to do x


·

failing to
ignore sunk costs:costs thatare
beyond recovery the a
moment decision is made

(e.g. insurance costs do not
vary per km)
·

failing to understand average / marginal distinction



3
marginal cost:costofan additional unitofc marginal benefitshould
exceed marginal cost
marginal benefit: benefit another unitofa adds

average cost:total costdivided by n

·
cost-benefit test: express costs and benefits in absolute rand terms, not
percentages.


positive normative
·
vs.
questions
aboutwhich policies institutional best
arrangements lead to
normative:a
question or


Outcomes


positive:a question aboutthe consequences of
specific policies or institutional arrangements

·
micro vs. macro:



group behaviour
micro: study individual
of choices or in individual markets;study
of choice under scarcity
broader markets
macro:
study of
aggregations of

, factors of
production
inputs used in the
production process to
supply goods and services

·
land

· labour
·

capital

entrepreneurship
·




Economic systems

An economic system is a means by which societies or governments organize and distribute available resources,
services, and goods across a geographic region or country.
Economic systems regulate the factors of production, including land, capital, labor, and physical resources.


e.g. capitalism, communism, socialism




Capitalism as an economic system
growth in
standards
living
of labour result
~
a
specialisation:division as a
economic system

firm
of
growth and market expansion

priveFynarkets,
i n the
. most
production takes place technology:firms
* in
competition had strong incentives

·
use markets to sell outputs adoptnew technologies
to


·

private ownership ofcapital goods Smith
> Adam
for use in firms
are
organised

inputs and private property
·


outputs are

, Gains from specialization
~
focussing on a limitedrange ofactivities
~
capitalism expanded economic importance of

both markets firms:this
+

enhanced opportunities
for specialisation


come concepts
relative price:
the price of one good or
service, compared to
another Cratio of 2 prices)
Beer:R10;Coke:RS
e.g.
~Beer's relative price is 2 Coke's

Coke's relative is Ibeer.
Inverse:
price
~




economic rent:

the difference between your chosen (best) option andreservation option (a.k.a."surplus")

>creates an economic incentive



reservation option:
the best
next option to the one chosen

*
choosing reservation option:economic rent 0 =




innovation rent:

the additional profita firm can make by choosing to use a new
technology thatreduces costs

·


profit-price xquantity sold-cost




whata re firms optimising?
profits

whatare their constraints?

· external:demand

·
internal:costofinputs (capital, labour, materials) technology
+

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