TOPIC 1: microeconomics.

Economic activity:It is all that human activity aimed at producing goods and services and
reduce to satisfy a need to meet this objective use goods that are scarce and are susceptible to
alternative uses. This activity is not to produce goods or services but to satisfy needs. producing
goods needs are met, rather low: when the amount of the resource is less than the number needed
to meet requirements. Produce: transform inputs into outputs.
Opportunity cost: difference between the actual cost and the cost of the need to meet to quit,
ie, can be used to meet various needs.
Wage gap: within a company pay gap between the most and least wins wins.
Efficiency: make the best use or consumption of resources. Relationship "resource
consumption / satisfaction of needs"
 average minimum: for x output using the least amount of input.
 Maximum use: given amount of input x maximize output.
Efficient production: when by reallocating resources would be possible to produce more than
one well (without decreasing production of another good simultaneously).
Effectiveness:meet the greatest number of goals. It has nothing to do with efficiency, because
the economy could be effective, but inefficient having been so effective without consuming so
many resources, then have wasted resources, thus being inefficient.
Sustainable development: Development that meets present needs without jeopardizing the
ability to meet the needs of future generations.
Question posed in class. True or False: no sustainability inefficiently?
To answer this question we must first be clear that the efficiency and sustainability is.
To define what is efficiency and sustainability have to be aware that it is the economic activity.
Economic activity is every human activity whose purpose is to produce and distribute scarce
goods to satisfy our needs which they are likely to use alternative s to satisfy our needs.
So we could say that efficiency is as long as the way a society to take advantage of the best
possible resources / scarce goods for an amount of output using the least amount of possible
inputs. While sustainability is meeting the current needs without compromising the ability of
future generations.
So considering these two meanings could say that, if we are not efficient not satisfy all needs,
ie about meeting their needs and others do not, So that sustainability would be affected and all
you would be getting would be effective, ie would only willing to achieve the objectives and
not to maximize resources / scarce goods.

Means
INPUTS OUTPUTS
PRODUCTION FACTORS PRODUCTION FINISHED PRODUCTS
materials  Goods Material
immaterial  Services Immaterial
Free goods They are not scarce, many needs can be satisfied with them, no one pays for
them, but they tend to production costs. FREE.
consumption  Use of goods to satisfy needs.
We need companies to produce goods.
required 1: We need something; Need 2: Desire to have that something. The needs are innate,
come from within you.
Marketing can channel your desire to facilitate your needs.
The market is regulating needs can be met. Here come the words of supply and demand.
Benefit (usually sustainability indicator) [º] = Income [I] - Production costs [C]
Economics agents: Involved in the economic activity of a society. They are 5:
 Families (consumers).  financial system (intermediary).
 Companies (producers).  External Sector (rest of the world
 Public administration.  imports).
But on this subject only we see: consumers and producers.
Resources needed to produce a good, are 4:
 Natural.  Capital.
 Workforce.  eNTREPRENEURSHIP

positive Economics normative economics

Academic, objective point of view, how
Politicians, like things should be making
things work without saying whether it is
decisions.
right or wrong.

What is microeconomics?
Studies the economic behavior of individual economic agents, decision making.
 Objective: determining the relative prices of goods and services that form in the
market.
To explain or determine prices of goods, services and factors, there are two assumptions:
1. First course, Maximum satis.
2. Second course, predict behavior.
Production of goods  Offer VS Consumption Demand is known as the market
equilibrium. The relationship between supply and demand determines the price. Must be
in accordance with the quantity and price.
"Ceteris paribus"  If everything remains constant.
For the study of these agents some assumptions are made, for example, if supply and
demand will not change, but if I did the price. As affect supply and demand, if there are
substitute goods.
Factors affecting the purchase decision:
 a) Price. d) P. substitutes.
b) Tastes and preferences. e) P. complementary.
c) Rent.
To paint the demand curve consider all other factors except the price of the good itself is
always constant Dx = f (Px).
The price of goods is set in the media. The demand is the number of services that
consumers want to buy to satisfy a need for a period of time.
 Law of demand  There is an inverse relationship between the price of a good
and the amount of demand (if the price increases, demand decreases and vice
versa).
 Demand curve  graphic representation of the relationship between the price of
a good and the quantity demanded assuming all factors except the price, are ctes.
substitute goods  various goods that meet the same need.
complementary goods  Sometimes we need other goods to meet our needs.
income effect  The value of money depends on the purchasing power of the individual.
Rent / Price = purchasing power.
substitution effect  The more expensive a well-consuming I leave and replaced by
another to meet the needs.
The demand curve can be individual or market, the market is calculated by summing each
individual curves in the demand curve, influence the size and composition of the
population.
Price changes do we move from the displacement curve, the change however if all other
factors, at the same price, demand changes. Factors causing a displacement curve:

left shift scroll Right

↓ The prices of substitute goods ↑ The prices of substitute goods
↑ The prices of complementary goods ↓ The prices of complementary goods
↓ consumer income ↑ consumer income
↓ The consumer tastes or preferences ↑ The consumer tastes or preferences
To paint the supply curve We consider all factors (except the price) are ctes. [We relate
the quantity supplied with the price of good] Ox = f (Px).
 The law of supply: a relationship between the price of a good and the quantity
supplied (if the price increases, and vice versa increases the offered amount.)
 The supply curve: graphic representation of the relationship of a good and the
quantity supplied.
The offer  Amount that companies are willing to sell. The more expensive a product is
most interested in a company to manufacture the product since it has more profit. It
depends on:
- The price of good. - The aim of producing companies.
- The price of production. - State of technology.
 left shift scroll Right
↑ The prices of production factors ↓ The prices of production factors
↑ technological change Competition ↑ technological changes decrease costs
Business objectives Business objectives

The market: The price and quantity equilibrium are given by the point where the supply
and demand curves intersect. Organization among consumers demanding certain assets
and businesses that are whom offered. At this point the consumer-producer exchange
occurs and needs are met. If it's not in the breakeven point, the market tends to balance.
If the state law fixed a price that is below breakeven, there is more demand than supply
and black markets are formed. If set above the equilibrium point, there is less demand
than supply, the company would find many unsold products. If the supply curve shifts to
the right, the low point of balance and lower prices.
Question posed in class. Changes in market equilibrium.
1. Based on the balance of the meat market, and economically graphical analyzes
what changes would result in a decrease in equilibrium price of fish.
As we know the market is the set of purchase of a given asset, ie, the market is responsible
for reaching an "agreement" between the producer and the consumer. It is so that the price
and quantity equilibrium are given by the point where the curve cut supply and demand,
what is called economic equilibrium.
So in this case if the price of fish disminuyese, balancing meat market would have to
reach a new agreement. As fish is a meat substitute market equilibrium would be affected
because demand for meat would decrease as the price of the substituent (in this case fish)
it is lower and meets our needs.
So the graph would be as follows:

2. Based on the balance of the meat market, and economically graphical analyzes
what changes would result in equilibrium an increase in consumer income.
As I well explained before, the market is the set of purchase of a given asset, ie, the market
is responsible for reaching an "agreement" between the producer and the consumer. It is
so that the price and quantity equilibrium are given by the point where the curve cut
supply and demand, what is called economic equilibrium.
In this case the balance of marking meat perform a rightward shift, ie increase, as
consumers have increased their income. So the balance of the meat market would have to
make a new agreement to achieve that balance.
So the graph would be as follows:

3. Consider the case of a company that is dedicated to manufacturing plastic seats

for sports stadiums. How influence on the equilibrium of market applications, the
cheapening of some of the factors of production used if they remain constant all
other factors? Use in a reply an economic explanation and graphic
representation.
As I well explained before, the market is the set of purchase of a given asset, ie, the market
is responsible for reaching an "agreement" between the producer and the consumer. It is
so that the price and quantity equilibrium are given by the point where the curve cut
supply and demand, what is called economic equilibrium.
In this case the balance of market making seats suffer and rightward shift due to cheaper
production factors used, so the market equilibrium will have to reach a new agreement,
which will be the new market equilibrium manufacture of seats.
So the graph would be as follows:
TOPIC 2: main concepts of microeconomics.
Elasticity:The elasticity can calculate how much demand will vary according to changes
in the price you do. The variation in price causes a variation in inequality in demand, the
flatter the demand curve more change there is in the offer before the price change. {The
elasticity of demand is the amount of variation of demand with respect to price increases,
sensitivity can be called demand more sensitivity more change from the price}. The
following factors must be taken into account:
1) It is not measured in absolute terms, it is in%.
2) For that variation between Pa and Pb to Pb to Pa is the same is done in absolute
value.
If the Eº> 1 there is a lot of sensitivity in changing demand, ie the price. (Elastic)
If the Eº <1, there is little sensitivity to changing demand, ie the price. (Inelastic)
Question posed in class: In times of sales, Does trade always manages to increase
their income and therefore profits, assuming that costs remain constant?
To answer this question we must first know that it is elasticity. The elasticity allows us to
know how much demand changes if the price increases or changes to know how much
the offer.The elasticity indicates how much the quantity of demand in percentage terms
for each 1% in the price of the good varies
So it depends on how the price elasticity of demand, ie if costs remain constant, profit
alone will be given by total revenue to be made, these in turn are given by the price of
good and the quantity demanded at the time of that good.
On the one hand, if Elasticity is greater than 1 causes an elastic demand, ie by lowering
the price cuts demand will increase more than proportionately the price change and that
will that equal costs, total revenue increase and profit companies also . On the other hand
if the elasticity is less than 1 provoke an inelastic demand, ie, the lower the price, the
quantity demanded increases less than proportionately, resulting in a decrease in income
and equity cost benefit is also reduced.
Demand is inelastic when the elasticity worth less than 1 and elastic when it is more than
one. Commodities are inelastic and luxury goods are elastic. The elasticity changes along
the curve at high prices, there are fewer people who can afford the product and are more
affected by the price change, however, at lower prices, more people can afford and price
changes not They affect both. When demand is inelastic rent plus raise prices because
demand does not drop much, however, if demand is elastic, income much lower prices
because demand increases. inelastic demand: the amount of demand varies less
proportionally to the change in prices (Eº <1) Elastic Demand: the amount of demand
varies more than proportionally to price changes (Eº> 1)
Elasticity of demand: is the percentage change in quantity demanded between the
percentage change in the price (Eº).
A demand curve straightIt has a variable elasticity. Because if the price were lower
cansaríamos us the good produced and instead to higher prices would eat less, so if you
lower the price increase consumption as long as the price drops.
How interested producers to be the demand curve price of the goods they produce?
What most interests a producer is that consumers are insensitive to price changes, ie, if
the price increases continue having the same demand, ie demand is inelastic.
What determines the demand is more or less elastic?
There are several factors, but only study two:
1) Short vs long term: short term Something that may have inelastic demand, can
be elastic in the long term
2) Substitutes: The existence of competitive substitutes makes the demand is
more elastic
3) Necessary or luxury goods: the goods needed are more inelastic than luxury
goods. {It has more elasticity luxury goods, as we are more sensitive than you
increase prices which are not indispensable to live, so we are more sensitive
to their higher price.}

 Cross-elasticity of demand. Sensitivity of demand for a good to a change in the

price of other goods
- Substitute good: Eº> 0 - Good complementary: Eº <0
 Income elasticity of demand.Sensitivity of a well to changes in income.
- Normal good: Eº> 0 - Well below: Eº <0
The elasticity of supply in quantity supplied divided by the price change. It depends on 3
factors:
1. Short vs long term: short term Something that may have inelastic demand,
can be elastic in the long term
2. Ease of storage: storable goods will be more elastic
3. Easy to reallocate factors: The easier it more elasticity

 Eº <1  inelastic  Eº> 1  Elástica

Consumption theory: Compare decision to satisfy a need. A consumer is a rational
economic agent who choose to buy a range of goods and services on which has
preferences. There are two factors that most influence:
1) Preferences. 2) Purchasing power.
Utility  The term utility is used as a measure of satisfaction that causes a well.
There are two approaches:
1. Cardinal It can be measured by the law of diminishing marginal utility more
times a good minus utility (satisfaction) gives is retained. It brings the law of
diminishing marginal utility (when more than a well brings less satisfaction
used).
2. Ordinal  You can not measure, but order which is more or less useful in
terms of satisfaction they give. It brings indifference curves and utility index
function.
Basket of goods Baskets of goods are different amounts of goods and services can
choose to meet requirements, can choose the basket, bo be indifferent.
The study is part preferences 5 hypotheses:
1) Principle of full ordination. The consumer can always pick and have to decide
between the baskets, bo be indifferent. It can not know the answer because it
would be irrational
2) Transitivity.Preferences are not contradictory. If the consumer thinks that a>
b> c, think that a> c.
3) Principle of non-satiation. A basket is preferable to another if it contains at
least one well and at least one
4) Continuity. Given a combination of 2 assets you can always reduce the amount
of good for another increase so as to compensate the reduction
5) Convexity. As it has much of a good, the consumer will decide to give up a
diminishing number of other good to get additional units of the first
Indifference-curveIt represents a set of baskets among which the consumer is
indifferent. It is represented by a map of indifference curves of a consumer preferences.
(You can not be a function cte.) What is the right of the curve is preferable and what is
left is less preferable.
Indifference curves can not be any shape:
 It slopes downward:
 no satietyBecause always the basket more quantity of goods have preferred.
 ContinuityIf both goods increase the new combination will have the same
satisfaction and will not be indifferent to the second.
 They can not be cut.
-The utility function, mathematical formulation of the map of indifference curves on those
preferences. They have a negative slope and decreasing. It is a way to represent consumer
preferences and thus describes her indifference curves provided:
a. all baskets among which are indifferent are matched by the same value.
b. the baskets are preferred over others are given higher values (only to order
curves).
The most remote corners of origin are more satisfying and more useful.
Marginal substitution ratio of and is willing to sacrifice for xy have more satisfaction.
It is not constant. It is the slope, change of sign of the indifference curve, evaluated at
each point. Follows the principle of convexity. Two goods are perfect substitutes when
the RMS is constant, the utility function is: U (x, y) = ax + by.
The budget constraint also affects consumer behavior. The budget line or balance R = x ·
Px + and · Py indicates the combination of goods that one can afford to increased income
rightmost is and consumers can choose any combination of goods ≤ budget line, even
thus, we prefer spending on the line by the search for efficiency. Consumer balance is the
point of tangency of the indifference curve far as possible with the budget line. At this
point the combination of goods will report the greatest satisfaction to consumers
considering their income. To find that point on the line of demand, we change the price
of one product and will change the equilibrium point.
Production sectors
 Primary sector  extraction and processing of natural resources in
unprocessed products.
 Secondary sector  processing of primary products.
 Third sector  economic activity related to services.
Production factors: anything material or immaterial employed in the production.
i. Natural resources  natural resources used in the production process.
ii. work L  labor used (n work).
iii. Capital K 
a. Human capital  knowledge and skills of individuals (education and
experience)
b. physical capital  tangible material elements (machinery, building)
c. Financial capital  money needed to build and maintain a business
activity.
iv. entrepreneurship  activity to organize the launch of production.
The owners of T, K, and L get paid for their use (rent, wages, interest) = profit,
excellent production.
The production function: indicates the maximum possible production for each
combination of inputs and in relation to the technology used. It shows what is technically
feasible when the firm operates efficiently. A along a curve isocuanta the same amount
of a product combining work hours with capital occurs. If you are more on the right
indicates increased production. Production possibilities are given by a map of isoquants.
marginal technique of substitution: amount the company that the company can
replace the K factor by L can maintain constant production. It is declining.
 Isoquants have more production when farther from the origin is.
 They are convex because they guarantee production efficiency: the only way to
get the same output and change one factor needs altering other.
 They can not be cut because it is the right and to the left produces less.
Difference between short and long term:
A. Short term: no fixed factors. (K varies is not constant.) [There are constant and
alterable factors]
B. Long term: all factors are variable.
To represent the curve of short-term production is marked a constant K and a graphical
amount-hours is created. The marginal productivity is the increase in production obtained
by adding the last unit factor, the slope.
Diminishing returns: as variables L units are added to fixed amounts of a point K
which increases 0 becoming less to even decrease it is reached.
Functions of production costs in the short term.
Cost  value of consumption or use of production factors.
 Short term: variable costs and fixed costs.
 Long term: all are returns to scale.
THE DIGITAL ECONOMY
externality: benefit or cost is not reflected in the market price.
positive externality: the actions of an individual increase the welfare of another.
negative externality: the actions of an individual decrease the welfare of another.
Externality or network effect: variation utility obtains a user consumption of a
product or as the number of users increases to consume the same product.
Positive: it increases the utility of the user.
Negative: decreases the utility user.