ECON 101 Chapter Notes - Chapter 1: Resource Allocation, Mixed Economy, Opportunity Cost

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31 May 2016
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ECON 101 Full Course Notes
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Economics is the study of the use of scarce resources to satisfy unlimited human wants. Factors of production resources used to provide goods and services frequently divided into basic categories of land, labour, and capital. Production act of making goods or services. Consumption the act of using goods or services to satisfy wants. Scarcity implies that choices must be made, and making choices implies the existence of costs. Every time a choice is made, opportunity costs are incurred. 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 sense. 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. A production possibilities boundary illustrates three concepts: scarcity, choice, and opportunity cost.

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