NEW- Macro Unit 1 Summary- Basic Economic Concepts
Published: 2024-08-05
Status:
Analyzed
Published: 2024-08-05
Status:
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
If a country moves from recession and unemployment to a strong economy with full employment, the economy will shift from an inefficient point inside the Production Possibilities Curve (PPC) to an efficient point on the curve; the PPC itself will not shift outward.
"Show what will happen on this graph when a country goes from having a recession with a lot of unemployment to having a strong economy and full employment. Pause the video and see if you can figure it out... we're going from an inefficient combination where workers aren't being fully utilized to an efficient combination at full employment which is a point on the curve. The curve doesn't shift."
Pending
An increase in the number of workers, improved worker quality (human capital), or more physical capital will cause the entire Production Possibilities Curve (PPC) to shift outward to the right, making previously unattainable production combinations possible.
"But if we did have more workers, or better workers, or more physical capital then the entire production possibilities curve would shift outward to the right. Combinations that were impossible would now be possible because we have more resources."
Pending
Given US production (5 planes or 10 cars/day) and Canadian production (2 planes or 8 cars/day), the US should specialize in planes (opportunity cost of 2 cars/plane), and Canada should specialize in cars (opportunity cost of 0.25 plane/car).
"The United States has a comparative advantage in the production of planes because they have a lower opportunity cost. And Canada has a comparative advantage in Cars... So with these numbers Canada should specialize in producing the cars the United States should specialize in producing planes."
Pending
A terms of trade where one plane is exchanged for three cars would be mutually beneficial for the US and Canada, as it would allow both countries to acquire the traded good at a lower opportunity cost than producing it themselves.
"To answer question four trading one plane for three cars would be mutually beneficial. It would benefit both countries because Canada can get a Plane by only giving up three cars instead of four and the United States can get a car by giving up only a third of a plane instead of giving up one half."
Pending
A decrease in the price of milk will result in a movement along the existing demand curve for milk (change in quantity demanded), rather than a shift of the entire demand curve.
"What happens to the demand curve for milk if the price of milk Falls... nothing the demand doesn't shift remember a change in the price of the product moves along the curve just remember price doesn't shift the curve"
Pending
If the price of a substitute product for milk decreases, the demand curve for milk will shift to the left, indicating a decrease in demand.
"What happens to demand curve for milk if the price of a substitute Falls... This would cause the demand for milk to decrease and shift to the left at every price consumers are willing and able to buy less because the price of a substitute has fallen they're going to buy the other good instead"
Pending
If the price of milking machines, a key input for milk production, increases, the supply curve for milk will shift to the left, indicating a decrease in supply.
"Show what happens to the supply curve for milk if the price of milking machines increases... milking machines are a key resource for producing milk so the supply of milk is going to shift to the left at every price milk producers are going to be willing and able to sell less milk"
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If the market price is above the equilibrium price, a surplus will occur, leading to a fall in prices as sellers compete to sell their excess inventory.
"When the price is too high and above equilibrium then there's a surplus and eventually prices will fall because sellers have all these extra units they're going to lower the price so people will buy them"
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If the market price is below the equilibrium price, a shortage will occur, leading to an increase in prices as consumers bid higher for the limited supply.
"When the price is below equilibrium and there's a shortage eventually prices will go up because consumers will bid up those prices"
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If the price of cream (an input for ice cream) significantly decreases, the supply curve for ice cream will shift to the right, resulting in a lower equilibrium price and a higher equilibrium quantity.
"Draw market for for ice cream and show what'll happen if the price of cream and input significantly decreases... the supply is going to shift to the right... price went down and the quantity went up"
Pending
When both the supply and demand curves shift simultaneously, either the equilibrium price or the equilibrium quantity (or both) will be indeterminate, meaning its direction of change cannot be definitively determined without knowing the relative magnitudes of the shifts.
"When two curves shift at the same time either price or quantity is going to be indeterminate in other words you won't be able to tell it could go up or it could go down"
Pending
If both demand and supply decrease, the equilibrium quantity will definitively decrease, but the equilibrium price will be indeterminate (ambiguous), as it could either increase or decrease depending on the relative magnitudes of the shifts.
"Assume you have a question that says the demand's going to fall and the Supply is going to fall what's going to happen to price and quantity... the quantity is definitely going to decrease the price might go up it might go down so that's the one that's indeterminate or your teacher might use the term ambiguous"
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