ECON 2002.01 Study Guide - Midterm Guide: Gross Domestic Product, Sole Proprietorship, Absolute Advantage

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ECON 2002.01 Full Course Notes
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ECON 2002.01 Full Course Notes
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Document Summary

Economics is the study of the ways individuals, firms, and society make decisions to allocate limited resources to competing wants. Respond to incentives (the factors that motivate individuals and firms to make decisions in their best interest. Microeconomics is the study of decisions making by individuals, businesses and industries. Macroeconomics is the study of broader issues in the economy, such a inflation, unemployment, and national output. Ceteris paribus is assumption used in economics that all other relevant factors or variables are held constant. Models are crafted from new ideas, then tested against real world data. (ex: will more. Should executive salaries and bonuses be capped for publicly traded corporations? government spending lead to economic growth?) Efficiency is how well resources are used and allocated. Equity is the fairness of various issues and policies. Positive question can be answered by available information or facts. Normative question addresses society"s beliefs about what should or should not take place.

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