Economics 231 – Key Concepts
(Unit I)
(By
the end of the first unit, you should know/be able to:)
Distinction
between macroeconomics and microeconomics
Distinction
between positive and normative economics
Distinction
between stock variables and flow variables
Distinction
between nominal variables and real variables
Nature
of “the economizing problem”
Role of
opportunity cost in making choices/decisions
Role of
sunk costs in rational decision-making
Major
determinants of demand for a product/service
Major
determinants of supply for a product/service
Distinction
between “demand” and “quantity demanded”
What causes each
How to illustrate each graphically
Distinction
between “supply” and “quantity supplied”
What causes each
How to illustrate each graphically
How
markets resolve shortages/surpluses
Meaning/characteristics
of an “equilibrium” price
Effect
of a change in demand (or supply) on price and sales
Effect
of a legal price ceiling placed on a product
at a level below
equilibrium
at a level above
equilibrium
Effect
of a legal price floor placed on a product
at a level below
equilibrium
at a level above
equilibrium
Meaning/significance
of concept of elasticity of demand
Use of
graphs to illustrate direct/positive relationships
Use of
graphs to illustrate inverse relationships