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.
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the notes cover the most of the work plan,
including a good revision recap of first year
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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
·
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
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