ECN 104 Chapter Notes - Chapter 2: Opportunity Cost
21 Apr 2011
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Document Summary
Economists as scientist: economists play two roles, scientists: t ry to explain the world, policy advisors: t ry to improve it. Used to simply the complex world, making it easier to understand. Used to study economic issues; highly simplified representation of a more complicated reality in order to increase understanding. M icroeconomics the study on how firms and households make decisions and how they. The study of economy wide phenomena; forces and trends that effect economy. Attempts to describe the world as it is. Attempts to describe the world as it should be. Opportunity cost of an item is what must be given up to obtain that item (slope of p. p. f = opportunity cost) Economic diagrams: circular flow diagram www. notesolution. com, production possibilities frontier. Graphs that show the combinations of outputs that the economy can produce given the available factors of productions and production technologies. Ex: product is efficient at points on the curve.
