ECON 1101- Midterm Exam Guide - Comprehensive Notes for the exam ( 18 pages long!)
Document Summary
Terms: scarcity the li(cid:373)ited (cid:374)ature of so(cid:272)iety"s resour(cid:272)es. Inflation an increase in the overall level of prices in the economy. The ten principles: people face trade-offs, to gain one thing, you must give up another thing. Every hour you spend studying economics, you lose an hour you could have spent studying math. How people make decisions: people face trade-offs, the cost of something is what you give up to get it, rational people think at the margin, people respond to incentives. How people interact: trade can make everyone better off, markets are usually a good way to organize economic activity, governments can sometimes improve market outcomes. Circular flow diagram a visual model of the economy that shows how dollars flow through markets among households and firms | fig. Production possibilities frontier a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology | fig.
