Eco chapter 2 reveiw

What is true about economist?

can't run controlled experiments on the entire economy, so they often use data from historical economic events.

Assumptions and models

Assumptions simplify reality so economists can focus on what's important. models are simplified versions of reality

Households

sell factors of production (land, labor, and capital)

Factor market | where businesses get the things they need to make products.

where households sell factors of production to firms.

As you produce more and more of one good, what happens?

its opportunity cost increases.

Because resources aren't equally suited to producing every good.

Microeconomics

individual households, firms, and specific markets.

Macroeconomics

the economy as a whole

Firms

A business that buys factors of production and produces goods/services.

Effecient ppf

On the line

Inefficient ppf

Between the line

Unattainable ppf

Outside the curve

Positive statement

What is

Normative statement

What should be

Increasing Opportunity Cost

When you make more of something, you have to give up more and more of another thing.

What is economic growth?

An increase in an economy's ability to produce goods and services.