ECON 295 Lecture 3: Econ chapter 1
3 Apr 2016
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Document Summary
Is the study of scare resources to satisfy unlimited human wants. A society"s resources are usually divided into land, labour, and capital. Economists refer to resources as factors of production. Resources can produce only a fraction of the goods and services desired by people. Every choice has an associated cost - opportunity cost. Opportunity cost is defined as the benefit given up by not using resources in the best alternative way. Resource allocation determines the quantities of various goods that are produced. Will the economy consume exactly what it produces. Microeconomics is the study of the allocation of resources as it is affected by the workings of the price system. An economy is operating inside its production possibilities boundary if some resources are idle. Growth in productive capacity is shown by an outward shift in the ppb. Microeconomics is the study of determination of economic aggregates. The design and effectiveness of government policy is relevant to discussing all four problems.
