Naked Economics Chapter Summary

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Chapter 1 Vocabularies 1. Scarcity: A situation in which there is not enough of something to meet everyone’s wants. 2. Microeconomics: Deals with the choice of small units such as households, firms and government agencies. 3. Three factors of production (inputs): 1) Labor: All of the productive contributions made by people working with their minds and muscles. 2) Capital: All the productive inputs created by people, such as tools, machines, factories used in production. 3) Natural resources 4. Opportunity cost: Highest valued alternative that must be sacrificed (为了得到某种东西所必须放弃的东西) 5. Economic efficiency(经济效率):所进行的任何改变都不会给任何人带来损失而能增加一些人的福利,这种状态是经济的有效率状况。 6. Efficiency in production(生产效率): The ability to produce a good using the fewest…show more content…
Point A to Point B PED= Therefore, demand is elastic Point C to Point D PED= Therefore, demand is inelastic “Relatively Inelastic” : Relevant range all in lower…show more content…
------------------------------------------------- PED>1 (elastic) percent change in QD > percent change in P ------------------------------------------------- (i) ------------------------------------------------- P Total Revenue = P x Q Fall in Total Revenue ------------------------------------------------- (ii) ------------------------------------------------- P  Total Revenue = P x Q Rise in Total Revenue ------------------------------------------------- B. ------------------------------------------------- PED<1 (Inelastic) percent change in QD < percent change in P ------------------------------------------------- (i) ------------------------------------------------- P Total Revenue= P x Q Total Revenue rises ------------------------------------------------- (ii) ------------------------------------------------- P Total Revenue= P x Q Total Revenue falls ------------------------------------------------- Demand Elasticities 1. Income Elasticity if Demand (EI) 2. Cross-price Elasticity of Demand
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