UVA ECON 2020 - 9-3-2012Handout (7 pages)

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9-3-2012Handout



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9-3-2012Handout

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Pages:
7
School:
University Of Virginia
Course:
Econ 2020 - Principles of Economics: Macroeconomics

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Choices and Trade offs Supply and Demand Basic Principles Elias Yannopoulos September 3 2012 Elias Yannopoulos Basic Principles Choices and Trade offs Supply and Demand Scarcity The central problems facing an economy What an how much to produce How to produce it For whom to produce it Scarcity resources are limited and wants are unlimited Because of scarcity people are forced to make choices Making choices means facing trade offs Making a choice means forgoing something else Hint opportunity cost Elias Yannopoulos Basic Principles Choices and Trade offs Supply and Demand Trade Trade is a voluntary exchange Channels goods to those who value them most Trade helps both sides of the exchange Trade creates value Zero sum vs Positive sum Trade is a positive sum game Elias Yannopoulos Basic Principles Choices and Trade offs Supply and Demand Demand The buying consuming side of the market Want vs Demand Law of Demand The quantity of a good demanded is inversely related it its price other things constant Demand Curve the graphical representation of the relationship between price and quantity demanded Demand vs Quantity Demanded Demand a schedule of quantities of a good that will be bought per unit of time at various prices other things constant Quantity Demanded a specific amount that will be demanded per unit of time at a specific price other things constant Demand is a curve and Quantity Demanded is a point Elias Yannopoulos Basic Principles Choices and Trade offs Supply and Demand Demand Cont Shifts Factors of Demand Consumer Income Prices of other goods Preferences Expectations Taxes and Subsidies Shifts of the demand curve vs movements along the demand curve Elias Yannopoulos Basic Principles Choices and Trade offs Supply and Demand Supply The selling production side of the market Produced vs Supplied Law of Supply The quantity of a good supplied is positively related to its price other things constant Supply Curve the graphical representation of the relationship



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