Economics 2014

[LastOfUs]

Thank you for that guys.

This may be a bit much to ask but I've been making some notes and I've found it is quite inevitable at this stage to more or less rip definitions or examples from the text book to actually make sense to myself but I really am struggling with forming my own concise definitions at this stage. Will this come naturally with participating in the course or? Like aforementioned with the bit much thing, do you think one of you could possibly look over my first little bit of notes, tell me if I've set it up well for economics and where I can improve on things? If not all G.

[dantan]

Thank you for that guys.

This may be a bit much to ask but I've been making some notes and I've found it is quite inevitable at this stage to more or less rip definitions or examples from the text book to actually make sense to myself but I really am struggling with forming my own concise definitions at this stage. Will this come naturally with participating in the course or? Like aforementioned with the bit much thing, do you think one of you could possibly look over my first little bit of notes, tell me if I've set it up well for economics and where I can improve on things? If not all G.

I think conceptually you seem to understand pretty decently. I'm guessing you're using the Morris text? In which case that book provides a lot of unnecessary details, so be aware of that.

Definition wise, the two most obvious ones to me that need a bit of work are:

Opportunity Cost - is defined as benefit foregone when a decision is made to allocate resources into the next best alternative. (This seems sort of clearer to me, than just stating 'when a decision is made.')

Efficient allocation of resources: occurs when scarce resources are allocated in a way which best maximises society's satisfaction of needs and wants. (it isn't necessary to bracket/refer to the four types in such a definition).

I think with a lot of what you've written, you have very good explanations, but not necessarily great definitions (i.e. not concise enough, a bit convoluted etc.). I wouldn't worry too much about this yet. Early days and you'll definitely get a better intuitive sense as you move along a bit. So the key is to keep updating and tweaking

[LastOfUs]

I think conceptually you seem to understand pretty decently. I'm guessing you're using the Morris text? In which case that book provides a lot of unnecessary details, so be aware of that.

Definition wise, the two most obvious ones to me that need a bit of work are:

Opportunity Cost - is defined as benefit foregone when a decision is made to allocate resources into the next best alternative. (This seems sort of clearer to me, than just stating 'when a decision is made.')

Efficient allocation of resources: occurs when scarce resources are allocated in a way which best maximises society's satisfaction of needs and wants. (it isn't necessary to bracket/refer to the four types in such a definition).

I think with a lot of what you've written, you have very good explanations, but not necessarily great definitions (i.e. not concise enough, a bit convoluted etc.). I wouldn't worry too much about this yet. Early days and you'll definitely get a better intuitive sense as you move along a bit. So the key is to keep updating and tweaking

Yeah bud I hope you're right. I have my first SAC a few days into the second week so I'm trying to understand things but yeah, if I were explaining some of these things in an answer it would be CONVOLUTED; this seems to be ATARnotes word of the week LOL. Thank you for those definitions, I'll replace mine with those. I'm not really sure how I'll be tweaking stuff throughout the year as I'm sure when I pass this topic I won't go over it again in detail until exam preparation .. should I be reviewing each area of study every few weeks after completing it to keep it fresh in my mind, or does that not work?

Not sure what the Morris text is. I have economic fundamentals in Australia which I'm never going to touch and the 2014 study guide for economics indigo.

[abcdqdxD]

should I be reviewing each area of study every few weeks after completing it to keep it fresh in my mind, or does that not work?

Yeah depends how dedicated you are. I probably had to spend about 1-2 weeks to relearn the entire Unit 3 during exam period.

[dantan]

Not sure what the Morris text is. I have economic fundamentals in Australia which I'm never going to touch and the 2014 study guide for economics indigo.

Ah I see, the way you'd structured your notes seemed similar to Morris to me. Though from what I understand, Eco Fundamentals is quite helpful!

As to the definitions, you'll find that a lot of them will start popping back up further down the track. E.g. efficient allocation of resources pops up in pretty much every single area of study, as do a lot of definitions. This is the beauty of the course, you'll start to find that everything will start linking across areas quite significantly, which is why in economics conceptual based learning is way more important than rote learning things

[Politics]

Yeah bud I hope you're right. I have my first SAC a few days into the second week so I'm trying to understand things but yeah, if I were explaining some of these things in an answer it would be CONVOLUTED; this seems to be ATARnotes word of the week LOL. Thank you for those definitions, I'll replace mine with those. I'm not really sure how I'll be tweaking stuff throughout the year as I'm sure when I pass this topic I won't go over it again in detail until exam preparation .. should I be reviewing each area of study every few weeks after completing it to keep it fresh in my mind, or does that not work?

Not sure what the Morris text is. I have economic fundamentals in Australia which I'm never going to touch and the 2014 study guide for economics indigo.

I liked the layout / content of those notes alot, is there any chance that you can provide us with update notes as you finish topics / aos's?

Also, LastofUs, i cannot seem to respond to your PM unfortunately, it comes up with an error - http://gyazo.com/6971b59e93e0d67b3a38e5f53eccafbb.png
So if you could PM back your Skype, and i will add you for sure! (as it sounds like a good idea)

[chasej]

I liked the layout / content of those notes alot, is there any chance that you can provide us with update notes as you finish topics / aos's?

Also, LastofUs, i cannot seem to respond to your PM unfortunately, it comes up with an error - http://gyazo.com/6971b59e93e0d67b3a38e5f53eccafbb.png
So if you could PM back your Skype, and i will add you for sure! (as it sounds like a good idea)

Lastofus has been banned iirc

[HawthornM8]

I just have a few questions that I'm probably looking at in a weird way but if you could please help me out I'd appreciate it.

1) When the demand the supply grow larger for a product, why does the price go up on a graph? I thought in theory that if you have increased demand and supply to meet a new equilibrium, the price will drop.
e.g. With the picture below, the quantity demanded goes from 100 to 150 so the supply goes up. With this increase demand, why does the price go up? Even though I don't believe it in my head, in theory, if a product experiences increased demand and it can meet that demand, the price will go down and vice versa?


2) I'm doing some homework and I've experienced a few questions that I find weird.

e.g. Which of the following would be most likely to cause a shift from S1 to S2? (It also has a basic graph that shows that supply goes left (increase) from S1 to S2).
a) a decrease in taxes paid by the industry
b) a removal of government subsides to that industry
c) a reduction in transport and freight charges
d) a decrease in the cost of raw materials

I personally chose D but couldn't it really be any of those?

[william.woon]

I just have a few questions that I'm probably looking at in a weird way but if you could please help me out I'd appreciate it.

1) When the demand the supply grow larger for a product, why does the price go up on a graph? I thought in theory that if you have increased demand and supply to meet a new equilibrium, the price will drop.
e.g. With the picture below, the quantity demanded goes from 100 to 150 so the supply goes up. With this increase demand, why does the price go up? Even though I don't believe it in my head, in theory, if a product experiences increased demand and it can meet that demand, the price will go down and vice versa?
(Image removed from quote.)

2) I'm doing some homework and I've experienced a few questions that I find weird.

e.g. Which of the following would be most likely to cause a shift from S1 to S2? (It also has a basic graph that shows that supply goes left (increase) from S1 to S2).
a) a decrease in taxes paid by the industry
b) a removal of government subsides to that industry
c) a reduction in transport and freight charges
d) a decrease in the cost of raw materials

I personally chose D but couldn't it really be any of those?

To answer your question for question 1, imagine if you were a supplier of umbrellas. You had two options supply 100 for the price of .40 pens or 150 for the price of .50 pens, knowing they all will be sold out. Obviously if they are able to make more and sell all of them for the higher price that will be the best decision.

Q2 I'm not too sure about that one, but I think it may be a, c or d. I may be wrong.

[chasej]

I just have a few questions that I'm probably looking at in a weird way but if you could please help me out I'd appreciate it.

1) When the demand the supply grow larger for a product, why does the price go up on a graph? I thought in theory that if you have increased demand and supply to meet a new equilibrium, the price will drop.
e.g. With the picture below, the quantity demanded goes from 100 to 150 so the supply goes up. With this increase demand, why does the price go up? Even though I don't believe it in my head, in theory, if a product experiences increased demand and it can meet that demand, the price will go down and vice versa?
(Image removed from quote.)

2) I'm doing some homework and I've experienced a few questions that I find weird.

e.g. Which of the following would be most likely to cause a shift from S1 to S2? (It also has a basic graph that shows that supply goes left (increase) from S1 to S2).
a) a decrease in taxes paid by the industry
b) a removal of government subsides to that industry
c) a reduction in transport and freight charges
d) a decrease in the cost of raw materials
I personally chose D but couldn't it really be any of those?

Answer to q.2 is b. as the supply curve moves left when supply conditions deteriorate and when subsidies are removed, business costs increase, profit margins fall. Thus suppliers will be less willing to supply and supply curve decreases (goes left). It's important to remember that supply going left is actually a DECREASE in supply, a shift to the right is an increase.

I could explain to you why the diagram works like that but it's pretty hard to explain it online so I suggest you ask your teacher!

[jtvg]

I just have a few questions that I'm probably looking at in a weird way but if you could please help me out I'd appreciate it.

1) When the demand the supply grow larger for a product, why does the price go up on a graph? I thought in theory that if you have increased demand and supply to meet a new equilibrium, the price will drop.
e.g. With the picture below, the quantity demanded goes from 100 to 150 so the supply goes up. With this increase demand, why does the price go up? Even though I don't believe it in my head, in theory, if a product experiences increased demand and it can meet that demand, the price will go down and vice versa?
(Image removed from quote.)

Remember that a shift of the demand curve is different from a movement along the demand curve. Movement along the demand curve means that, ceteris paribus, demand increases with a decrease in price. However, a shift in the demand curve is an exception of ceteris paribus - e.g. future expected value of the good increases, increases/decreases in disposable income, etc. In the illustration, there is a increase shift of the demand curve. One possible reason is that people expect the good to become more valuable, or their disposable income increases, such that the equilibrium is at a higher demand and higher price level.

[abcdqdxD]

Q1: Imagine you're at the grocery and there's one apple left in the store. You were about to pick it up but someone else snatched it first. You two argue who should have the apple, and you're willing to outbid eachother to have the last piece of fruit. Demand for the apple of (two consumers) is greater than the supply (one apple) in the market. When demand exceeds supply, prices go up as consumers bid up prices for a the benefit of consuming a good or service. That's the law of demand.

Now, when prices increase due to additional demand, this sends 'price signals' through the market mechanism and alerts suppliers apples are highly desired by consumers (consumer sovereignty). More suppliers enter the market for apples, while existing suppliers may increase their production capacity. In essence, consumer demand dictates what is produced. But due to the lag effect of expanding supply, in the short run demand for a good/service can be expected to push prices upwards if the increase in demand exceeds the increase in additional supply.

Q2: It would be B. For these type of questions, try to spot the odd one out. A, C and D all have positive effects on the supply-side market while B is unfavourable for producers.

[007]

I'm a little confused when reading graphs and if you could please help me out I would appreciate it.

When looking at a graph are you meant to read it in terms of the 'law of demand' or the 'law of supply' or do they both apply to all graphs, or not at all? That may be a tad confusing but I'm a little confused as to why when there is an increase in demand and the price goes up (law of supply I think), yet the law of demand is about how when there is an increase in demand the price of the product will go down per unit. If someone could please explain it to me I'd be greatful (graph is hopefully below if I did it correctly).


Link didn't work so I'm trying again - if it doesn't I'll attach as a download.

[abcdqdxD]

the law of demand is about how when there is an increase in demand the price of the product will go down per unit. If someone could please explain it to me I'd be greatful (graph is hopefully below if I did it correctly).

The law of demand states that an increase in demand will result in an increase in price and vice versa.

As to why an increase in demand leads to an increase in price:


Q1: Imagine you're at the grocery and there's one apple left in the store. You were about to pick it up but someone else snatched it first. You two argue who should have the apple, and you're willing to outbid eachother to have the last piece of fruit. Demand for the apple of (two consumers) is greater than the supply (one apple) in the market. When demand exceeds supply, prices go up as consumers bid up prices for a the benefit of consuming a good or service. That's the law of demand.

Now, when prices increase due to additional demand, this sends 'price signals' through the market mechanism and alerts suppliers apples are highly desired by consumers (consumer sovereignty). More suppliers enter the market for apples, while existing suppliers may increase their production capacity. In essence, consumer demand dictates what is produced. But due to the lag effect of expanding supply, in the short run demand for a good/service can be expected to push prices upwards if the increase in demand exceeds the increase in additional supply.

[chasej]

I'm a little confused when reading graphs and if you could please help me out I would appreciate it.

When looking at a graph are you meant to read it in terms of the 'law of demand' or the 'law of supply' or do they both apply to all graphs, or not at all? That may be a tad confusing but I'm a little confused as to why when there is an increase in demand and the price goes up (law of supply I think), yet the law of demand is about how when there is an increase in demand the price of the product will go down per unit. If someone could please explain it to me I'd be greatful (graph is hopefully below if I did it correctly).

(Image removed from quote.)
Link didn't work so I'm trying again - if it doesn't I'll attach as a download.
(Image removed from quote.)

edit: I made a mistake in this post please disregard this explanation and read posts on next page for corrections 
The law of demand refers to price changes affecting quantity demanded. An increase or decrease in demand occurs as a result of the supply curve shifting which changes equilibrium price or price in the market changing.

When the actual demand curve moves demand is not increasing or decreasing, but rather the entire demand curve is shifting to the right or left, meaning at any given price level, demand would be different. Essentially the shift in the demand curve has nothing to do with the law of demand in terms of price affecting demand, but is rather to do with some sort of change in buyer behaviour which has caused levels of demand at every single price point to change.

Remember: A shift is not a decrease or increase, but rather a sign of changing market conditions meaning at any given price level, levels of demand/supply (whichever line is effected) would be different.