Mid-Economy Notes PDF

# Economics Notes ## Ch.1 Economics: Social Science, In Large measure and the study of how people make choices * The study of how individuals and societies choose to use the scare resources that nature and previous generations have provided. * Adam Smiths Pescience which studies the wealth of S...

# Economics Notes ## Ch.1 Economics: Social Science, In Large measure and the study of how people make choices * The study of how individuals and societies choose to use the scare resources that nature and previous generations have provided. * Adam Smiths Pescience which studies the wealth of Societies. * Robbins & behavior of Consumer to satisfy all his human's wants by using limited resource. - **Micro: ** حاجة صغيرة - **Macro: ** حاجد كبيرة ## Ch.2 - **Economic problems: ** human wants (unlimited, uncountable) increased, many * Resources: Scope scarce: the quantity of resources which are available aren't enough to satisfy all a humans wants. * **Scarcity problems:** resources aren't enough to satisfy all human's wants. - **Economic Resources:** - Land or natural resources, - Labor or human resources - Capital (Land, trees, Rental or Physical resources) - **Enter Prener ship (organizer)** ## Reasons for Economic Problem * The scarcity of economic resources * The unlimited human's wants * We must choose from them to satisfy according to their importance ## Economic systems * **Market economy:** It's the economy which individual people and firms pursue their own self interest without any central direction or Regulation. * **Command economy:** Central direction * **Mixed economy:** Mix between free and command ## PPf A graph that shows all the combinations of goods and services that can be produced if all resources are used efficiently. **Main assumptions** * Society has two resources only * It produces two products only (X1,X2) * The level of technology constant * There’s full employment and efficiency in use of resources. ## Opportunity Cost The best alternative that we give up or forgo when we make a choice. * Opportunity cost is the slope of PPf. * Formula: $O.C = \frac{\Delta X1}{\Delta X2}$ Where: * $\Delta X1$ is the change in product X1 * $\Delta X2$ is the change in product X2 *** ## Ch.3 **Demand definition:** The amount of product that a consumer buys at the current market price. **Determinants of Demand:** * **The Price of the product itself:** P1 * **The Price of the alternative product:** P2 * **The Price of the complementary products:** P3 * **Income of the consumer:** I * **Wealth of the consumer:** W * **The taste of the consumer:** T * **The expectations about future prices:** F **Demand function** Q.D.1=F(P.1, P.2, P.3, I, W, T, f) **P1↑, Q.D.1↓ and vice versa** **Demand Curve:** - **P↑, Q.D.1↓** - **I↑, Q.D.1↑ ** - **W↑, Q.D.1↑ ** - ** T↑, Q.D.1↑ ** - ** F↑, Q.D.1↑ ** **Q.D.1 with P1** * Negative * D2: Positive * P3: Negative * I: Positive * W: Positive * T: Positive * F: Positive ## Market demand curve The Market demand curve is the sum of the demand curves for all individuals in the market. ## Supply * **Price of product itself:** P1 * **Price of other products:** P2 * **Price of factors of production (cost of production):** P3 * **Technology:** T * **Goal of Producer:** G **Supply function** Q.S.1 = f(CP, Pp, P3,T,G) **P2↑, Q.S.1↑ ** **P3↑, Q.S.1↓ ** **T↑, Q.S.1↑ ** **G↑, Q.S.1↑** **Q.S.1 with P1** * Positive * P2: Decrease * P3: Decrease * T: Increase * G: Increase ## Market Equilibrium **Q.D. = Q.S** * There’s no tendency for price to change. * **Equilibrium point:** When the quantity demanded equals the quantity supplied ## Changes in Equilibrium * These results from changes in demand or supply, or both. **Demand** * Increase in demand shifts to the right * Quantity increases * Equilibrium Price increases **Supply** * Increase in supply shifts to the right * Equilibrium quantity increases * Equilibrium price decreases ## Changes in Supply and Demand * Both of them will charge where: * **Demand increases and supply increases** * **Demand decreases and supply decreases** * **Demand increases and supply decreases** * **Demand decreases and supply increases** ## Constraints on Market * This’s represented in price ceiling. - **Price Ceiling** * It’s a maximum price that sellers may charge for a good usually set by government, such as what happens in the oil market. * **Shortage** Q.D > Q.S - **Black Market:** A market where illegal trading takes place at market-determined prices. - **Price Floor** - **Surplus** Q.S> Q.D. ## Ch.4