BSNS113 Latest 2023 Rated A+

BSNS113 Latest 2023 Rated A+ economics study of how resources are managed in society scarcity limited means but unlimited wants three economic questions What to produce? How to produce? For whom to produce? incentives people react to changes in their economic environment. Changes in price or incomes cause people to act differently economic costs opportunity cost. The total net value of the next best alternative forgone when making a decision. Opportunity cost formula OC of activity A = total cost of A + any benefit lost from B - costs avoided choosing A (NO SUNK COSTS) positive economics scientific study of economics. Portrays facts and uses words like 'is' normative economics evaluating side of economics. Portrays opinions and uses words like "ought" and "should" interdependence economic agents rely on each other to meet their current level of goods and services. PPF assumptions One country, two goods, fixed level of resources and technology and resource heterogeneity (differ in quality of production of each good) PPF A, B, C, X = feasible combinations. A, B, C = technically efficient. E = economically efficient. D = infeasible in the current economy technically efficient producing the maximum amount of goods and services given its inputs economic efficiency economy is producing approximately equal amount of both goods PPF shifts outwards economic growth; if a resource or technology that affects both goods increases PPF shift outwards for one good an improvement in technology or resources for one good. This makes the PPF steeper absolute advantage being able to use fewer inputs to provide a good or service than another producer comparative advantage the ability to produce a good or service at a lower opportunity cost than another producer trade between countries producers supply what they have a comparative advantage in and demand what they do not opportunity cost equation: trade OC(A) = B/A terms of trade the ratio at which a country can trade its exports for imports from other countries Daniel Ricardo invented the theory of comparative advantage Karl Marx wrote Das Kapital, the father of communism Adam Smith Wrote "the Wealth of Nations" in 1776 and created the Theory of the Invisible Hand (market responds to price signals) and adopted the division of labour and absolute advantage Alfred Marshall supply and demand analysis, credited for creating the supply-demand model movements along the demand curve changes in price cause a change in Qd demand curve marginal benefit curve movements of the demand curve change in demand due to changes in the no. of consumers, tastes, incomes, price of complements, price of substitutes, price expectations (#TICSPc) normal good all things equal, an increase in income would lead to an increase in demand for the good inferior good all things equal, an increase in income would lead to a decrease in demand for the good substitutes goods used in the place of one-another. when the price of one good increases and the demand for another decreases (butter and margarine) complements goods used together. Decrease in the price of one causes demand for the other to increase substitution effect if the price of a good decreases the consumers substitute towards the good as it becomes relatively cheaper income effect if the price of a good decreases, consumers have more income and can purchase more of it movements along the supply curve due to price changes movements of the supply curve due to changes in other factors; cost of inputs, technology, future expectations, no. of sellers, productivity vertical