economics ib unit 1

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Economics Unit 1

Economic growth:
National income is the value of all the goods and services produced in a given period. It can be measured by adding up all the activity along one of the three routes A, B or C.
















D is not used because it is too difficult to measure.
Real National Income is = National Income – Inflation
We measure increases in real nationalincome per capita, this measure of the increase in economic activity is known as economic growth. Economic growth is an increase in actual output, a movement from a point inside the PPC curve to a point that is nearer to the curve, is simply a measurement of the change in a country´s national output or Gross Domestic Product (GDP, products produced nationally), or Gross National Income (GNI, id GDP+ national products produced in another country), it does not tell us about the welfare of people in a country.

Economic Development:
Is a measure of welfare (education indicators, health indicators, social indicators). Human Development Index (HDI) weights up real national income per head, the adult literacy rate, the average years of schooling, life expectancy and ranks the countries ofthe worlds in terms of “development”. The HDI is calculated for a country giving a number between 0 and 1. The nearer the value is to one the more developed the country is. High levels of economic growth do not ensure that increased equity us achieved within a country.

Sustainable Development
The World Commission on Environment and Development was formed by the UN (Naciones Unidas). They agreedthat economic growth could not be sustained into the future if environmental degradation is taking place and non-renewable resources are being used up. “Sustainable Development” is development that meets the needs of the present without compromising the ability if future generations to meet their own needs. Negative consequences of economic growth in terms of the effect on the environment, When weexamine how resources should be allocated we must consider how such resource allocation affect future generations.

Unit 2
Markets
Where buyers and sellers come together to carry out an economic transaction. Types:
Physical: goods or services exchanged by money
On-line: products are sold with the use of credit cards or money transfers
Product : good and services are bought or soldFactor: factor or production bought or sold
Financial: international currencies are bought or sold

Demand: quantity of a good or service that consumers are willing (wanting) and able (financially) to buy at a giving price in a given time period. This is known as effective demand and is shown in the demand curve.
The law of demand sets that “as the price of a product falls the quantity demanded ofthe product will usually increase ceteris paribus (all the other things being equal)” this is because the utility gets every time you buy the product so if prices also gets lower people buy. Ceteris paribus because there are a number of different factors that determine something, so only one is changing and all of the others are held constant. It may be illustrated using either a demand scheduleor a demand curve.



Linear Demand Functions:
The demand curve is built up from
Using an equation: Demand function
A simple demand function relates
The QD to the P of a product
QD = A – B.P
QD: quantity demanded
A: quantity demanded if P is 0
B: slope of the curve (elasticity)
P: Price


The non-price determinants of demand.
There are a number of factor that determine demandand lead to an actual shift of the demand curve to either the left (decrease) or the right (increase). Always making the Ceteris Paribus assumption, if not analysis would be too complicated.
1) Income: a change in income affects the product in different ways depending on its type: * Normal Goods: income rises, then the demand for the product will also rise. The demand curve will shift to the...
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