S G D P G Q

Opportunity Cost : the value of Costs : expenses a firmMct=s→ pt

Q in

the next best alternative incurs from engaging in its McT=s← Pt QtAbsolute Advantage : fewer resources business activities D → P T Q 4

D ← p 1 Q 1are used in production Profit : total revenue ( TR ) minus

*

Comparative Advantage : lower opp .total cost ( TC ) Determinants Of

cost of production Marginal Revenue :( MR ) addi - Demand : population ,

Terms of Trade : ratio of goods at tional revenue a firm receives income, prices of subs

Which countries agree to trade at from selling one more unit 4 complements ,tastes 1

Production Possibilities Frontier : Marginal Cost : ( MC ) the preferences , expectations( PPF ) a graphical representation of the additional Cost a firm incurs Determinants of Supply :

goods a country can produce given When they sell I more Unit MC shifters, expect a -

their productivity E constraints Market Power : the ability Of a tons,

# of sellers

Consumption Possibilities Frontier : firm to set its own price p

( C PF ) : graphical depiction of what Producer surplus : ( Ps ) differ .

'

Eprice to Max

- profit :

a country can consume given its end between price received -

$66-

productivity ,constraints

,da trading E the cost of production

- I.

-

opportunities Law of Demand : The price-

: Mc- •

Spontaneous ( emergent ) order : of a good or service is-

, iii.MR D

0 4 S 10

a phenomenon in Society that is inversely related to the •individual Firm in

Perfect Competition

the result Of human action but quantity demanded ( PT Qtr ) c individual firm 's supply )

B = 5 p 1 1 1 1 1 1 1 H 1 1 1 1

not human design Law of Supply : Prices Galan -

.. =3

, ;;.ly#..y.EIiYb?3IFr?Demand : the relationship between titles supplied are directly QHOO " = '

a. ÷.

aEEM"

the price of a good or services related ( PTQT ) bk (Pqmerwagrgtaottsqwmweasitintion

the quantity demanded Perfectly Competitive Equili - 100

•S = MC

Inferior Goods : as income increases,

brium : occurs at a price where sellers.

demand decreases QD is equal to Qs•

a

p100 SOO 900

Normal Good : as income increases ,Dead weight Loss : LDWL ) the 20 s=Mc

=

demand increases reduction in total surplus from I= ImsSubstitute Goods : an increase Market inefficiencies 12=11111

•%;y••Iii ( ill

PE-

- nrr( decrease ) in the price Of One 8=1111iii.111111

good causes an increase ( decrease ) Winners from Int'

l Trade : =shortage• Consumers / producers from I I I D

In the price of the other good i i 1 i i 1 1 1 11 Qincreased variety

4001^600Complimentary Goods : an increase QD=Qs

( decrease ) in the price of one• firms 1 Workers in export p

mc=s

good causes a decrease ( increase ) intensive industries

in the demand for the other good° lower prices

'

§*tpI" ' '

.

Consumer Surplus : ( Cs ) differ .

Losers from Int '1 Trade :

a

end between consumers'

• firms 1 workers in import

willingness to pay ( wtp ){ the intensive industries s s→ s←

price ( P ) of the good or service° increased expenditures D P Q Pf QP PTQt

Revenue : income a firmOn displaced Workers

D → pp QT p ? Qp Pga ?

receives for engaging in itsCPSGIPWIPMEP ts= ( s + Ps D ← Pt

QtPTQ ? P ?Qt

business activities