Studied by 7 people
Scarcity
________- limited resources, unlimited economic wants.
Model
________ makes assumptions as mentioned before- full employment, fixed resources, fixed technology.
PPC
________- Used to see the maximum amount of products that can be created with scarce resources.
Economic Growth
________= growing the curve so it reaches farther out;
minimum wage
Increasing ________ pays some people more, but also forces businesses to hire less people.
Opportunity Cost
________- Basically the cost of choosing one option over another.
All resources are limited, some more than other
have to manage these while fulfilling as many economic wants
Economists must see possible consequences
cant just analyze what is there, have to predict what is not
Scarcity
limited resources, unlimited economic wants
Capital goods
government spending, more money spent on capital goods -→ future economic growth
Resources
Land, Labor, Capital, and Entrepreneurial ability
Economics focuses on how to deal with scarcity
macroeconomics deals with entire economy, micro deals with specific markets
PPC
Used to see the maximum amount of products that can be created with scarce resources
Anything on the line is and efficient use of resources
Inside is inefficient, outside is not attainable
Model makes assumptions as mentioned before
full employment, fixed resources, fixed technology
Opportunity Cost
Basically the cost of choosing one option over another
Example
If you make 10 dollars in a day and decide to go on vacation for 4 days, the opportunity cost is 40 dollars
Opportunity cost of food = reciprocal of opportunity cost of wood
4 units of wood per unit of food
Marginal Analysis
Analyzing benefits vs. costs of economic decisions
Graph shows constant opportunity cost
As you make more wood, you are losing a fixed amount of food, and vice versa
This graph shows increasing opportunity cost
Basically, as you give up more resources for making one thing to make another thing, those resources are less suited to make the new thing, so the opportunity cost is higher
Bias
"First rule of economics → scarcity, first rule of politics → forget rule one of economics."
Consumer goods
goods intended for direct use or consumption - helpful in short term, but not in long term.
Assumptions
full employment, fixed resources, fixed technology
Utility
How useful something is based on how low the opportunity cost is
Marginal Analysis
Analyzing costs vs. benefits of any decision - MR >= MC
Economic Growth
growing the curve so it reaches farther out
Note 
Flashcard (30)