Quick Revision Quiz

As price levels increase, firms are willing to increase their output because the high prices offer incentives to make greater profits.

→ √a×√b=√ab → √a÷√b=√(a/b) → √a×√a=a

-Select a basket of goods and record their prices. -Weight all items according to expenditure. -Record prices in next year. -Calculate the percentage increase from year 1 to year 2. -Multiply weights by percentage changes -Add up all the weighted percentage changes. -Divide by the sum of the weights.

When the countries have the exact same opportunity cost in the production of each good.

A movement along a curve occurs when price changes. A shift in the curve occurs when something besides price changes.

Barriers that naturally exist in the market.

examples: -Demand for econ teachers derived from demand for econ courses. -Demand for software engineers derived from demand for apps

F

Behavioural barrier: incumbent firms setting a low price in the market will make it unprofitable for new firms to enter the market.

Productivity = Output per Input