Textbook Notes (362,768)
Canada (158,052)
ECON 208 (107)
Chapter 1

Chapter 1, Introduction to Microeconomics

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McGill University
Economics (Arts)
ECON 208
Mayssun El- Attar Vilalta

1 economy system in which scarce resources are allocated among competing uses 2 Main characteristics of free-market economies 1 - Individuals pursue their own self-interest 2 - People respond to incentives 3 - Prices are determined in open markets 4 - People earn their incomes by selling the services of the inputs they own or control 5 - Property rights exist 3 factors of production resources used to produce goods and services; land, labor, capital 4 goods tangible commodities 5 services intangible commodities 6 production the act of making goods or services 7 consumption the act of using goods/services to satisfy wants 8 opportunity cost the cost of using resources for a certain purpose, measured by the benefit given up by not using them in their best alternative use 9 Scarcity A situation that exists where there are not enough resources to meet the human wants 10 Production possibilities boundary A curve showing which alternative combinations of commodities can just be attained if all available resources are used efficiently; it is the boundary between attainable and unattainable output combinations. 11 resource allocation the allocation of an economy's scare
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