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UGA ECON 2105 - Review for Test 1
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ECON 2105 1stEdition Lecture 7 Outline of Last Lecture I. Antioxidant and redox regulation of gene transcription Outline of Current Lecture I. Supply and Demand: Module 5, 6II. GDP: Module 10III. Module 11IV. Module 12Current LectureReview: Module 5, 6, 7, 10, 11, 12I. Supply and Demand: Module 5, 6- Factors that will shift supply curve: anything related to cost of production, or supply, o Input prices (wages, oil prices) o Changes in production technology (productivity) o Change in labor supply o Price of related goods (coca cola goes down if energy drinks demand goes up)o Entry/ exit of the firmso Change in union powero Government subsidies o Natural disasters (hurricanes) - Change in quantity demanded= change in price (the price of shoes goes down, people buy more shoes) - Change in demand= behavioral change, (ex. Chocolate makes you live longer, people buy more) (ex. Shape ups make you have better posture, people buy more shape ups) must be not price related (good advertising) - Market for milk is at equilibrium. Participate in advertising causing a positive demandshock. Also more milk producers enter the market causing a positive supply shock o The equilibrium price will….. ambiguous change (we don’t know) o Quantity of milk will….. rise These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- The cost of sensors used in making digital cameras falls (a positive supply shock) while a successful ad campaign makes digital cameras more fashionable (positive demand shock) as a result o Equilibrium price…. Ambiguous change o Quantity will… rise - If coconuts are considered a normal good and there is an expectation on the part of both consumers and producers that the prices of coconuts will rise significantly in 2013, then the (suppliers will lower their production now so they can sell more later at a higher price, negative supply shock, price up, quantity low) (consumers will buy more now, positive demand shock, Price up, quantity up) o equilibrium price will …. Go up o Equilibrium quantity ….. ambiguous impact on quantity - For consumers pizza and hamburgers are substitutes. A rise in the price of a pizza causes rise in the equilibrium price of hamburgers and rise in the equilibrium quantity of hamburgers. o Higher demand for hamburgers because price of pizza went up (use a graph to figure it out) - Based on the demand and supply model, which of the following will result in an increased equilibrium price of milk? o A shift to the right of the demand curve for milk (positive demand shock) - The market of soybeans is initially in equilibrium. Because of “mad cow disease” producers in other sectors decide to replace bone meal with soybeans in cattle feed. Thelikely effect of this increase use of soybeans in other sectors on the market for soybeans is that o The equilibrium price and quantity will rise II. GDP: Module 10- A single woman is getting lawn service, later she gets married to, and later she stops her lawn service. What happens to US GDP? o US GDP will decrease, because the service isn’t being produced anymore. (now her husband does it for, home production is not included in GDP)- (expenditure approach only counts FINAL GOODS) o the value of unsold brand new Firestone tire (produced in US in 2013) kept in inventory.  inventory investment, counted in GDP o the value of brand new Bridgestone tires (US good) purchased by US owned Ford Motor Co. car manufactured  not counted in GDP o the value of brand new Goodyear tires (US good) purchased by a typical American customer  included in GDP (consumer spending)- what happens to US GDPo the fraction of women working outside of home increases  home production goes down, and GDP will go up! o Higher tax rates cause some people to hide more of the income they earn  GDP will go down because its underground economy (not paying taxes on it) (it wouldn’t be counted) - Income = wages + rents + profits + Interest + tax on imports III. Module 11- Nominal GDP 2011= price 2011 * quantity 2011- Nominal GDP 2012 Price 2012 * Quantity 2012- Real GDP = nominal of base year – quantity at the prices of the base year for the next year - Growth rate= (real GDP/ base year) * 100 IV. Module 12 - Labor force- unemployed and employed - Discouraged workers are not considered in the labor force therefore not counted when trying for figure out unemployment rate. - Workers are laid off and start looking for work  unemployment goes up - People without jobs who are looking for work find work  unemployment goes up - People without jobs and are looking for work give up and stop loking for work out of the labor force - People without jobs and not looking for work take a job immediately  enter the labor force and unemployment goes


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