Textbook Notes (367,979)
United States (205,929)
Economics (213)
01:220:103 (66)

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Neil Sheflin

1 economics a social science that studies how people make choices 2 scarcity the condition that resources are limited, causing choices to be made 3 free good a good that doesn't require another good to be forgone 4 3 questions relating to scarcity 1. What should be produced? 2. How should they be produced? 3. For whom should we produce it? 5 opportunity cost the cost of the best alternative forgone in making any choice * every choice has an opportunity cost 6 1. economists care so much about opportunity cost 7 2. economists assume that people maximize their self-interests 8 3. economists assume that people pay attention to the consequences of small changes in the margins they pursue 9 margin current level of an activity 10 choice at the margin a decision to do a little more or a little less of something 11 microecnomics focuses on the choices of consumers and firms and the impact those choices have on individual markets (What, How, Who, Role of Prices, markets) 12 macroeconomics studies the determinants of overall level of output/income (GDP), overall level of prices (CPI, GDP Deflator), economic growth, role of monetary/fiscal policy 13 ceteris paribus all other things unchanged 14 fallacy of false cause incorrect assumption that one event causes another because the two events tend to occur together 15 scientists can't prove a hypothesis to be true, they can only: fail to prove something false 16 most problems in economics are the results of: ceteris paribus and fallacy of false cause 17 production possibilities model A model that shows the goods and services that an economy is capable of producing – its opportunities – given the factors of production and the technology it has available. 18 economic system the rules that define how an economy's resources are to be owned how to make decisions over their usage 19 factors of production - labor - capital - natural resources 20 human capital the skills a worker has as a result of education, training, or experience that can be used in production 21 financial capital includes money and other "paper" assents that represent claims on future payments 22 technology knowledge that can be applied to the production of goods and services 23 entrepreneur a person who seeks to earn profits by finding new ways to organize factors of production 24 economic growth the process through which an economy achieves an outward shift in its production possibilities curve
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