SC ECON 224 - Exam 1 Study Guide (5 pages)

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ECON 224 1st Edition Exam 1 Study Guide Lectures 1 12 Intro to Economics Learning Objectives 1 Economics the study of how people institutions and society make economic choices under conditions of scarcity a Scarcity anything that is limited ex Money natural resources and time 2 Opportunity costs the value of the good service or time forgone to obtain something else what you give up 3 Positive 4 Compare Contrast Micro and Macro Economics a Microeconomics explores the decisions of the consumer worker or a business b Macroeconomics concerned with the economy as a whole or major components of the economy i States nations and global Demand and Supply Part 1 1 Market place of interaction between buyers and sellers a Exchange goods and services for money b Can be local national or international c Face to face or online EBay Craigslist d Price of goods and services are determined in markets 2 Demand amount consumers are WILLING and ABLE to purchase at a given price a Willing have to have a preference b Able can you afford it 3 Individual vs Market Level a Individual level what you decide b Market level what does society decide ex Sardines price c Every time you spend a dollar you are voting for that product 4 Law of Demand Other things equal as price falls the quantity demand rises and as the price rises the quantity demand falls a Others things equal assumption when price changes everything else in your life and economy stay constant i Preferences stay the same always willing or unwilling to purchase ii Income remains the same b Quantity demand and price are inversely related 5 Price Elasticity of Demand Measure how responsive to price changes are the buyers a Shows the slope of the demand curve b Test score sale example Teacher is willing to sell 100 test score for the first test but each person only needs one Did not matter how low of the price on the test score because there is no reason for people to buy more than one c Price sensitive small change in price change can