Economics

“Economics is the social science that analyzes the production, distribution, and consumption of goods and services. ”

~ Wikipedia on economics

“Taloustiede on yhteiskuntatiede, joka tutkii lähinnä taloudellisia päätöksiä tekevien toimijoiden kannustimia ja käyttäytymistä, sekä niiden perusoletuksista johdettuilla malleilla ja teorioilla erilaisia taloudellisia ilmiöitä. Tavallisia tutkimuksen kohteita ovat hyödykkeiden| kulutus, tuotanto ja allokointi, markkinoiden toiminta sekä aina kokonaistalouteen liittyvät kysymykset kuten talouskasvu ja inflaatio. Suomeksi taloustiedettä sanotaan myös kansantaloustieteeksi erotuksena liiketaloustieteestä. ”

~ Suomenkielinen Wikipedia on taloustiede

w:Economics is divided to the study of w:microeconomics an w:macroeconomics with various sub-fields.

w:Microeconomics ( w:fi:Mikrotaloustiede ) (from Greek prefix micro- "μικρό" meaning "small" + "economics"- "οικονομια") is a branch of economics that studies the behavior of individual households and firms in making decisions on the allocation of limited resources. ( Wikipedia )

w:Macroeconmics ( w:fi:Makrotaloustiede ) (from Greek prefix "makros-" meaning "large" + "economics") is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. ( Wikipedia )

2012-10-23

• In w:markets ( w:fi:Markkinat (taloustiede) ) w:demand and supply control the prices and goods that are produced. This is the model of w:Supply and demand ( w:fi:Kysyntä ja tarjonta ) .
• w:Scarcity ( w:fi:Niukkuus ) of resources affects production decisions.
• All production decisions have an w:opportunity cost ( w:fi:Vaihtoehtoiskustannus ).
• w:Market equilibrium ( w:fi:Taloudellinen tasapaino ) refers to a condition where a market price is established through competition such that the amount of goods or services sought by buyers is equal to the amount of goods or services produced by sellers. ( Wikipedia ) Market equilibrium is where the w:demand curve and the supply curve intersect.

The w:demand curve is the graph depicting the relationship between the price of a certain commodity and the amount of it that consumers are willing and able to purchase at that given price. ( Wikipedia ).

• The w:law of demand is an economic law, which states that consumers buy more of a good when its price is lower and less when its price is higher (w:ceteris paribus). ( Wikipedia )

• w:Substitution effect and w:income effect explain the law of demand

• w:Normal goods are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive w:income elasticity of demand. ( Wikipedia ) vs. an w:inferior good is a good that decreases in demand when consumer income rises, unlike normal goods, for which the opposite is observed. ( Wikipedia )

2012-10-30

w:Economies of scale In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. w:Diseconomies of scale are the forces that cause larger firms and governments to produce goods and services at increased per-unit costs. The concept is the opposite of economies of scale. ( Wikipedia )

In economics, w:returns to scale ( w:fi:Skaalaetu ) and economies of scale are related terms that describe what happens as the scale of production increases in the long run, when all input levels including physical capital usage are variable (chosen by the firm).

w:Utility ( w:fi:Hyöty ) to w:consumer is a representation of preferences over some set of goods and services. ( Wikipedia )

w:Marginal utility ( w:fi:Rajahyöty ) - In economics, the marginal utility of a good or service is the gain (or loss) from an increase (or decrease) in the consumption of that good or service. ( Wikipedia )

w:Elasticity (economics) ( w:fi:Jousto ) is the measurement of how changing one economic variable affects others. ( Wikipedia )

w:Price elasticity of demand ( w:fi:Kysynnän hintajousto ) (PED or Ed) is a measure used in economics to show the responsiveness, or elasticity, of the quantity demanded of a good or service to a change in its price. ( Wikipedia )

w:Price elasticity of supply (PES or Es) is a measure used in economics to show the responsiveness, or elasticity, of the quantity supplied of a good or service to a change in its price. ( Wikipedia )

w:Income elasticity of demand ( w:fi:Kysynnän tulojousto ) measures the responsiveness of the demand for a good to a change in the income of the people demanding the good, ceteris paribus.

w:Cross elasticity of demand or cross-price elasticity of demand measures the responsiveness of the demand for a good to a change in the price of another good. ( Wikipedia )

There are more elasticies in the w:Elasticity (economics)

2012-11-06

w:Total cost == w:fixed cost + w:variable costs

A w:production function ( w:fi:Tuotantofunktio ) is a function that specifies the output of a firm, an industry, or an entire economy for all combinations of inputs. ( Wikipedia )

w:Marginal product of labor also known as MPL is the change in output that results from employing an added unit of labor.( Wikipedia )

w:Marginal cost ( w:fi:Rajakustannus ) is the change in total cost that arises when the quantity produced changes by one unit. That is, it is the cost of producing one more unit of a good. ( Wikipedia )

w:Average cost or unit cost is equal to total cost divided by the number of goods produced (the output quantity, Q). It is also equal to the sum of average variable costs (total variable costs divided by Q) plus average fixed costs (total fixed costs divided by Q). ( Wikipedia )

w:Market structure is the number of firms producing identical products which are homogeneous. The types of market structures include the following:

• w:Monopolistic competition ( w:fi:Monopolistinen kilpailu ) , also called competitive market, where there is a large number of firms, each having a small proportion of the market share and slightly differentiated products.
• w:Oligopoly ( w:fi:Oligopoli ) , in which a market is dominated by a small number of firms that together control the majority of the market share.
  • w:Duopoly, a special case of an oligopoly with two firms.
• w:Monopsony, when there is only one buyer in a market.
• w:Oligopsony, a market where many sellers can be present but meet only a few buyers.
• w:Monopoly ( w:fi:Monopoli ) , where there is only one provider of a product or service and w:Barriers to entry prohibit entering the market for other businesses.
  • w:Natural monopoly, a monopoly in which w:economies of scale cause efficiency to increase continuously with the size of the firm. A firm is a natural monopoly if it is able to serve the entire market demand at a lower cost than any combination of two or more smaller, more specialized firms.
• w:Perfect competition, a theoretical market structure that features no w:barriers to entry, an unlimited number of producers and consumers, and a perfectly elastic w:demand curve.

All definitions of market structure from Wikipedia article w:market structure

The w:Herfindahl index ( w:fi:Herfindahlin indeksi ) (also known as Herfindahl–Hirschman Index, or HHI) is a measure of the size of firms in relation to the industry and an indicator of the amount of competition among them. ( Wikipedia )

w:Game theory ( w:fi:Peliteoria ) is a study of strategic decision making. More formally, it is "the study of mathematical models of conflict and cooperation between intelligent rational decision-makers."

2012-11-13

w:Macroeconomics

w:Gross domestic product (GDP) ( w:fi:Bruttokansantuote ) is the market value of all officially recognized final goods and services produced within a country in a given period of time. ( Wikipedia )

w:Circular flow of income or circular flow refer to a simple economic model which describes the reciprocal circulation of income between producers and consumers. ( Wikipedia ) which is used to calculate the GDP.

Consumer expendiatures are divided to the w:services, w:durable goods and w:consumables ( a.k.a. non-durables )

w:Unemployment ( w:fi:Työttömyys )

w:Frictional unemployment

w:Structural unemployment

Cyclical unemployment

w:Business cycle (or economic cycle) ( w:fi:Suhdannevaihtelu ) refers to economy-wide fluctuations in production or economic activity over several months or years. These fluctuations occur around a long-term growth trend, and typically involve shifts over time between periods of relatively rapid economic growth (an expansion or boom), and periods of relative stagnation or decline (a contraction or recession). ( Wikipedia )

w:Consumer price index (CPI) ( w:fi:Kuluttajahintaindeksi ) measures changes in the price level of consumer goods and services purchased by households. ( Wikipedia )

2012-11-20

• w:Financial markets ( w:fi:Rahoitusmarkkinat ) are important for enabling financing of w:investments ( w:fi:Investointi )

• w:Industrial revolution ( 1750-1850 ) ( w:fi:Teollinen vallankumous )

• Economics growth model is affected by w:labor productivity and w:technological change.

• w:Human capital is the stock of competencies, knowledge, social and personality attributes, including creativity, embodied in the ability to perform labor so as to produce economic value. ( Wikipedia )

• w:Creative destruction ( w:fi:Luova tuho ), sometimes known as Schumpeter's gale, is a term in w:economics which has since the 1950s become most readily identified with the Austrian American economist w:Joseph Schumpeter,who adapted it from the work of w:Karl Marx and popularized it as a theory of economic innovation and the w:business cycle.

• Lack of w:Property rights (economics) and w:rule of law is keeping the poor countries poor.

Notes

Chapter 3

• Demand schedule != demand curve. Demand schedule is a table, not a curve
• In w:economics, a complementary good is a good with a negative w:cross elasticity of demand, in contrast to a w:substitute good.
• w:Normal goods are any goods for which demand increases when income increases and falls when income decreases but price remains constant, i.e. with a positive income elasticity of demand. ( Wikipedia )

Chapter 6

• A w:budget constraint represents the combinations of goods and services that a consumer can purchase given current prices with his or her income. ( Wikipedia )
• A w:Giffen good is one which people paradoxically consume more of as the price rises, violating the law of demand. In normal situations, as the price of a good rises, the substitution effect causes consumers to purchase less of it and more of substitute goods. In the Giffen good situation, the income effect dominates, leading people to buy more of the good, even as its price rises. ( Wikipedia )
• In economics and business, a w:network effect (also called network externality or demand-side economies of scale) is the effect that one user of a good or service has on the value of that product to other people.
• w:Path dependence explains how the set of decisions one faces for any given circumstance is limited by the decisions one has made in the past, even though past circumstances may no longer be relevant. ( Wikipedia )
• w:Sunk costs are retrospective (past) costs that have already been incurred and cannot be recovered. ( Wikipedia )

Chapter 10

w:Allocative efficiency is a type of economic efficiency in which economy/producers produce only those types of goods and services that are more desirable in the society and also in high demand.( Wikipedia )

Chapter 13

w:Potential output (also referred to as "natural gross domestic product" or "Potential GDP")) refers to the highest level of real Gross Domestic Product output that can be sustained over the long term. ( Wikipedia + term Potential GDP as per book )

Chapter 16

• w:Procyclical is a term used in economics to describe how an economic quantity is related to economic fluctuations. It is the opposite of countercyclical. However, it has more than one meaning. ( Wikipedia )
• w:Monetarism is a tendency in economic thought that emphasizes the role of governments in controlling the amount of money in circulation. It is the view within monetary economics that variation in the money supply has major influences on national output in the short run and the price level over longer periods and that objectives of monetary policy are best met by targeting the growth rate of the money supply. ( Wikipedia )
• w:Taylor rule is a monetary-policy rule that stipulates how much the central bank should change the nominal interest rate in response to changes in inflation, output, or other economic conditions. ( Wikipedia )