Download Study Guide for Exam 1 - Economics Food Fiber System | AAEC 1006 and more Exams Genetics in PDF only on Docsity! Study Guide 2 Value Questi ons Law of diminishing marginal returns A law of economics stating that, as the number of new employees’ increases, the marginal product of an additional employee will at some point be less than the marginal product of the previous employee. Direct Cost Any cost related to the production method of a good or service. Indirect Cost Costs that are not directly accountable to a cost object Opportunities Cost The cost of an alternative that must be forgone in order to pursue a certain action. NOTE: Growth = more truck and more car More Trucks less cars = not growth 2 definiti on of econo mics Economics 1) Concerned with the way resources are allowed among alternatives uses to satisfy human wants. 2) The study of natural decision making 3) Study of value Human wants things, services, goods, and circumstances Resource the things or services used to produce goods which can be used to satisfy wants Economic resources are scarce Free resource abundant like air 3 Case Study Questi ons 1) The cost of war $50 billion pentagon estimated Cost of lost weapons Reduction of national output Increase unemployment $53.9 billion allies contributed The importance of opportunities cost to determine actual cost 2) Cost of College Education spend(direct and indirect cost) + opportunities cost Opportunities of every is different The reason of publics school cost lower because of subsidy 3) Barge Loss of earning – opportunities cost New barge did not take to the account of damage cost The cost of raising and repairing it exceed the cost of buying a similar barge Yes if the price of part increase the cost of repairing would result to increase 7 PPC Questi ons Production Possibility Curve Why concave？ Not all input give you the same output Increasing opportunities cost C Inefficient D Scarcity A Choice B Choice 8 Educati on Questi ons Total Benefits – Total Cost = Net Benefits ∑MB = TB ∑MC = TC No subsidy YOU + total cost DE YOU + total benefit CDE Net benefit C With subsidy YOU + total cost EF YOU + total benefit CDEGF Society B + H Net benefit CDG Net benefit you + subsidy B+C Tax payers contribute D + G + H Over-subsidy marginal cost curve lower Under-subsidy close to MC Q1 no subsidy Q2 with subsidy Q3 Over subsidy 6 Enviro nment Eco Questi ons 4 GNP Questi ons Expenditure Approach GNP = C+ I + G +X – M = Y Where (X -M) = Net export and Y= Gross Income Expenditure approach = Income approach Consumer, investment, Government 2 Circula Definition: A neoclassical economic model depicting how money Oikos = household
