Economics Principles: Markets, Externalities, and GDP
Supply, Demand, and Economic Policy
Price Controls
Buyers always want lower prices, while sellers want higher prices, creating conflicting interests. A maximum price is the highest legal price at which a property can be sold. When the government imposes a price ceiling, two outcomes are possible:
- The equilibrium price is below the maximum price, making the price ceiling irrelevant.
- The price ceiling is below the equilibrium price, restricting market forces. The market price cannot exceed the ceiling, leading to a shortage.
Incidence of Tax
: the way it distributes the burden of a tax among market participants.
10.exernalidad: uncompensated effects produced by the actions of a person on the welfare of another.
11. Well excludable: a good is excludable when it is possible to prevent a person using it
Well rival in consumption: a good is rival in consumption when use by one person reduces its use by another.
Parasitic or free-rider: a person receiving the benefits of a good but avoids paying.
18.The production factor markets: factors of production factors used to produce goods and services, labor, land and capital are the three most important. Although the factor markets are similar in many respects to those of goods are different in important ways: the demand for a factor of production is a derived demand.
Production function: the relationship between the amount of inputs used to produce a good and the quantity of production of that good.
Marginal product of labor: increase experienced by the amount of output when using one more unit of work as the number of workers increases the marginal product of labor declines ie the production process shows a diminishing marginal product: the property whereby the marginal product of a factor decreases with increasing quantity.
19. Revenues and discrimination: compensatory difference: wage gap to compensate for non-monetary characteristics of different jobs. Human capital: the word usually refers to the capital stock of equipment and structures of the economy, the essence of capital is that it is a factor of production that has occurred, there is another type of capital on physical capital, human capital accumulation investment in people, like education and job training. Guild: An association of workers who negotiate with the employer the wages and working conditions. Strike: organized withdrawal of labor from a firm by a union. Efficiency wage: higher wages to balance paid by companies to increase worker productivity. Discrimination: providing different opportunities to similar individuals who differ only by race, ethnicity, sex, age or other personal characteristics.
23.Pib: measuring two things at once: the total income of all members of the economy and total expenditure in the production of goods and services in the economy. In an economy as a whole, income must equal expenditure. That is because the income of an economy is like spending is simply that any transaction has two parties: a buyer and a seller. We can also see the equality of income and expenditure using the circular flow diagram, this diagram describes all transactions between the homes and businesses in a simple economy.
GDP: gross domestic product is the market value of all final goods and services produced within a country during a certain period of time. The gdp is divided into four components of expenditure: consumption: the household expenditure on goods and services. The investment is the purchase of goods to be used in the future to produce more goods and services, is the sum of purchases of capital equipment and structures stocks. The state purchases: include spending on goods and services by the central government and regional administrations and local authorities. Includes salaries of workers in the civil service and pubic works spending. Net exports: they are equal to purchases by foreigners of goods produced by our country (exports) minus the purchases of foreign goods from our country (imports), the sale that a company from Spain to a buyer other rising net exports.
GDP measures the total spending on goods and services in all markets of the economy, total spending increases from year to year, must be true one of two things: 1.la economy is producing more goods and services or 2. Goods and services are sold at higher prices. Economists study the evolution of the economy want to distinguish these two effects, we use real GDP, which is the production of goods and services valued at constant prices is calculated by first choosing one year as base year.
Nominal GDP uses current prices to value the production of goods and services in the economy.
GDP deflator: the price level indicator is calculated by dividing nominal GDP by real GDP and multiplying the result by 100. The GDP deflator measures the current level of prices relative to the base year. The GDP deflator is one of the indicators that economists use to monitor the average level of prices in the economy, and therefore the rate of inflation.