economics_for_manager, Role in market equilibrium.

May 20th, 2015
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Aberystwyth University
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Market – process or an institution in which producers and consumers interact in order to sell and buy a good or service.

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1. Introduction to EconomicsScarcity Excess wants to amountOpportunity cost - Cost of the next best alternativeEconomic growth, free goods, competitive market, factor endorsements (quantity and quality)Market economy, command economy, mixed economy Production possibilities frontier Endowed economic with fixed amount of resources is characterized by given level of technology, producing 2 goods.What an economy can do, not what it choices to do, it reflects scarcity because the economy is constrained to choices and not unlimited wants. Negative slope in order to produce more of the good, resources have to be diverted away from the production of the good so that less of it is produced. There is an opportunity cost in producing that extra unit of good.Bowed towards the origin because resources tend to be specialized. Bows get steeper, reflecting that the opportunity cost of producing more of good X is increasing, and the law of increasing costs.Actual growth Amount of goods and services it actually producesPotential growth Rate at which a countrys economy could grow if all its resources were fully employed.Growth occurs if there is an increase in Land, Labour, Human capital, Capital and Technology and institutions improve.2. MicroeconomicsMarket process or an institution in which producers and consumers interact in order to sell and buy a good or service. Market economy market forces answer to the three fundamental questions and

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