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Microeconomics
THE STUDY OF THE BEHAVIOR OF INDIVIDUAL PLAYERS—SUCH AS
INDIVIDUALS, FAMILIES, AND BUSINESSES—IN AN ECONOMY
Macroeconomics
THE STUDY OF THE BEHAVIOR OF THE ECONOMY AS A WHOLE;
CONCERNED WITH LARGE-SCALE ECONOMIC ACTIVITY
Production Possibility Curve (Frontier)A GRAPH USD TO ISLLUSTRATE THE IMPACT
OF SCARCITY ON AN ECONOMY; FOUR ASSUMPTIONS ARE MADE IN PPC’S:
1. All resources are fixed.2. All resources are fully employed.3. Technology is fixed.4. You can only produce two goods.
Underutilization
THE CONDITION IN WHICH ECONOMIC RESOURCES ARE NOT
BEING USED TO THEIR FULL POTENTIAL, RESULTING IN FEWER
GOODS AND SERVICES
Efficiency
THE CONDITION IN WHICH ECONOMIC RESOURCES ARE USED
TO PRODUCE THE MAXIMUM AMOUNT OF GOODS AND SERVICES
Cost-benefit Analysis
THE PRACTICE OF EXAMINING THE COSTS AND EXPECTED BENEFITS OF A CHOICE AS AN AID TO DECISION
MAKING
Option
A contract giving the investor the right, but not the obligation, to buy or sell
stock at a future date at a preset price
National Association of Securities Dealers Automated Quotation System–
1. Most often referred to as2. Sometimes called over-the-counter
stocks3. The most volatile exchange b/c it
features may hi-tech, insurance, and medical stocks
NASDAQ
DOW JONES INDUSTRIAL AVERAGE-AVERAGE OF 30 STOCKS IN THE MARKET
The DJIA is an index of “blue chip” U.S. stocks. It is called an “average” because it originally was computed by adding up stock prices and dividing by the number of stocks. The 30 companies that make up the DJIA are all major players in their industries; these stocks are widely held by individuals and institutional investors. These 30 stocks represent about 1/5 of the $8 trillion-plus market value of all U.S. stocks.
http://nyjobsource.com/djia.html
LESS DEVELOPED COUNTRIES (LDCs)-These countries have a lower GDP, less well developed
industry, and a lower standard of living
Ex. Many African, South American, and Eastern European countries
Six Determinant used to determine the level of development
• DEVELOPED – TRANSITIONAL (DEVELOPING) – LDC
1. PER CAPITA GDP2. HEALTH3. EDUCATION4. ENERGY USE5. CONSUMPTION OF GOODS AND SERVICES6. LABOR FORCE
Who is Adam Smith? (What did he write? What did he believe?)
Wrote The Wealth of Nations; reasoned that people behave in ways that satisfy their economic self-interest therefore, there is an “invisible hand” that guides
the economy and the government should not interfere.
Who determines stock prices?
Consumers looking to purchase the stock determine the stock price
(just like supply and demand with products)
Why do some people make risky investments?
Typically, the riskier the investment, the larger the
opportunity for gain.