ECON 104 Chapter Notes - Chapter 1: Microeconomics, Investment Goods, Opportunity Cost
Document Summary
Chapter 1 review questions: some stores give free products to consumer. An economist would say the products are not free. Answer: the products may be given free to the consumers for marketing purposes, such as to attract customers to the store. The products, however, are not free to the store. Scarce resources had to be used to produce the free products and those resources had to be paid for by the store. Answer: theoretical economics, or positive economics/economic analysis, is the systematic gathering of relevant facts and the derivation of principles with these facts. Theoretical economics systematically arranges facts, interprets them, and generalizes from them. Policy economics entails the formulation of policies or recommended solutions to specific economic problems. Economic theories are the foundation of economic policy. The economic principles developed from economic theory shape the direction of economic policy and offer insights into the possible outcomes from economic policies: distinguish between microeconomics and macroeconomics.
