The concepts revolve around fundamental economic principles, including the dynamics of supply and demand, consumer choice, and the effects of scarcity. Resource allocation and income inequality are also emphasized, with methods to measure inequality by comparing different income groups.
Trade Barriers-The three major barriers to international trade are natural barriers, such as distance and language; tariff barriers, or taxes on imported goods; and nontariff barriers.
Terms of Trade-terms of trade allows a country to import a good at a lower opportunity cost than the cost for them to produce the good domestically, which in return the country gains from the trade.
Comparative Advantage-A comparative advantage gives a company the ability to sell goods and services at a lower price than its competitors and realize stronger sales margins.
Resource Markets
Expenditures and Taxes-tax levied on the total consumption expenditure of an individual. It may be a proportional or a progressive tax
Income Inequality-measuring income inequality means dividing up the population into various groups being high, middle, and low incomes and then comparing the groups, a task that can be carried out in several ways.
Wage Determination-determined by the intersection of demand and supply.
Supply/Demand Vs Quantity Supplied/Demanded-The distinction between supply and quantity supplied is similar to the difference between demand and quantity demanded.
Elasticity- degree to which individuals, consumers, or producers change their demand or the amount supplied in response to price or income changes.
Supply, Demand, and consumer choice
Cost of Production and Market Systems
Monopolistic Competition-a market where many firms sell differentiated products.
Shutdown Rule- firm should continue operations as long as the price (average revenue) is able to cover average variable costs
Total Cost-the sum of all costs incurred by a firm in producing a certain level of output.
Marginal Cost- degree to which individuals, consumers, or producers change their demand or the amount supplied in response to price or income changes. It is calculated by taking the total change in the cost of producing more goods and dividing that by the change in the number of goods produced.
Budget Line- Look at what consumers can afford by charting their budget constraints.
Opportunity Cost-indicates what must be given up to obtain something that’s desired.
Scarcity- decide how and what to produce from limited resources. Which means there is a constant opportunity cost involved in making economic decisions.
