Economics

• economic goods have opportunity cost and free goods don’t have opportunity cost - the reason economic goodshave opportunity cost is because they are made of resources that are limited and could be used for something else while free goods are made out of resources that aren’t scarce or have restriction
• defining the basic economic problem is not just finite resources and unlimited wants but also the choices being made because of it
• by increasing the wages of workers, you increase the cost of production which causes supply to decrease
• If price decreases, quantity demanded increases but some determinants of demand may increase the price while increasing quantity so make sure you can differentiate this
• PES is always negative so if you get a positive PES, it is usually a decrease because it is a negative multiplied by a negative
• Changing the rate of interest will reduce borrowing as higher interest makes consumers less interested in borrowing
• Variable cost is the total cost - fixed cost so if you get a total cost of 5 for an output of 0, and you get a total cost of 7 for an output of 1 then your fixed cost is 5 and your variable cost is 2
• Diseconomies of scale are things that makes the firm less efficient and if its internal, that means its within the firm and if its external, that means it’s outside the firm
• External costs must be defined as having a harmful effect on the third party
• Recession is when there are two consecutive quarters (six moths of) falling GDP
• A shift of the supply to the right causes an extension in demand
• PES is % change in QS divided by % change in price
• A higher supply does not mean its higher in quantity but rather lower in quantity
• When price is multiplied by the quantity demanded of a product, it calculates total revenue
• Average fixed cost decreases as output increases
• When a PPC is not maximizing its resources, the graph should be drawn with a dot inside the curve 
• Remember that seasonal jobs and new workers that just entered the workforce are a part of frictional unemployment
• An increase in the labour force does not necessarily mean that actual jobs are given to those people so when asked about effects, consider things like availability and supply
• if supply shifts to the left, demand contracts and if supply shifts to the right, demand extends
• what is the value for perfectly inelastic demand?


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• define unemployed


  someone in the labour who doesn't have a job and is actively looking one, doesn't include anyone economically inactive
• under which conditions is it easy for specialisation and trade between two countries


  • their allocation of resources must be different so they can trade
  • the ability of both countries to allocate their resources is easy so they can specialise faster and produce faster
• if you are importing more goods, that means you are exporting more of your currency and vice versa
• Primary Income - includes income earned by individuals and firms

  • Earnings of residents working abroad minus earnings of foreigners working in home economy
  • Profits and investment incomes of firms that come in and go out of the economy