Economics
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Transcript of Economics
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1. The study of how people choose to use their limited resources to satisfy their unlimited wants.
2. A system used to manage limited resources for the production, distribution, and consumption of goods and services.
1)Economics and 2)Economy
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1. The condition that results because people have limited resources but unlimited wants.
2. Tradeoff is giving something up to get something else.
1)Scarcity and 2)Tradeoffs
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1. A way to compare the cost of an action with the benefits of that action.
2. What are some costs and benefits to sleeping an hour later in the morning?
Cost-benefit Analysis
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• Scottish born philosopher and political economist.
• “Father of modern economics”
Adam Smith
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1.Micro looks at decisions made by individuals, households, and businesses
2.Macro focuses on the workings of the economy as a whole.
Microeconomics vs. Macroeconomics
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1. The willingness and ability to take risks involved in starting and managing a business.
Entrepreneurship
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1. A model that shows all combinations of two products that can be produced with the resources and technology currently available.
Production Possibilities Frontier (PPF)
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Production Possibilities Frontier (PPF)
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• Economic Equity – The fairness with which an economy distributes its resources and wealth.
• Economic Systems – A society’s way of coordinating the production and consumption of goods and services.
Economic Systems
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• Traditional economy – An economic system in which decision about production and consumption are based on custom and tradition.
• Command economy – An economic system in which decisions about production and consumption are made by a powerful ruler or government.
Economic Systems
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• Market economy – An economic system in which economic decisions are left up to individual producers and consumers.
• Mixed economy – An economic system in which both the government and individuals play important roles in production and consumption.
Economic Systems
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• Free enterpirse system – An economic system in which the means of production are mostly private owned and operated for profit.
Economic Systems
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1.Goods
2.Services
3.Productivity
4.Opportunity Cost
Review Terms