Chapters econ

Chapters econ - Chapter 1"At the core of economics is the...

Info iconThis preview shows pages 1–5. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 1: “At the core of economics is the idea that “there is no free lunch.” You may be treated to lunch making it “free” to you, but someone bears the cost-ultimately society. Scarce inputs of land, equipment, farm labor, the labor of cooks and waiters, and managerial talent are required. Because these resources could have been used to produce something else, society sacrifices those other goods and services in making the lunch available. Economists call such sacrifices opportunity costs: the value of what is given up to obtain something else. To get more of one thing, society forgoes the opportunity of getting something else. So the cost of that obtained is the value of that sacrificed to get it.” Page 4, paragraph 3
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 2: The polar alternative to the command system is the market system, or capitalism. The system is characterized by the private ownership of resources and the use of markets and prices to coordinate and direct economic activity. Participants act in their own self- interest. Individuals and businesses seek to achieve their economic goals though their own decisions regarding work, consumption or production. The system allows for the private ownership of capital, communicates through prices, and coordinates economic activity through markets - places where buyers and sellers come together. Goods and services are produced and resources are supplied by whoever is willing and able to do so. The result is competition among independently acting buyers and sellers of each product and resource. Thus, economic decision making is widely dispersed. Also, the high potential monetary rewards create powerful incentives for existing firms to innovate and entrepreneurs to pioneer new products and processes.” Page 2, paragraph 5
Background image of page 2
Chapter 3: “The ability of the competitive forces of supply and demand to establish a price at which selling and buying decisions are consistent is called the rationing function of prices. In our case, the equilibrium price of $3 clears the market, leaving no burdensome surplus for sellers and no inconvenient shortage for potential buyers. And it is the combination of freely made individual decisions that sets this market-clearing price. In effect, the market outcome says that all buyers who are willing to pay $3 for a latte will obtain one; all buyers who cannot or will not pay $3 will go without one. Similarly, all producers who are willing and able to offer a latte for sale at $3 will sell it; all producers who cannot or will not sell for $3 will not sell their product.” Page 59, paragraph 6
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Chapter 4: “The degree of price elasticity of supply depends mainly on how easily and quickly producers can shift resources between alternative uses to alter production of a good. The easier and more rapid the transfer of resources, the greater is the price elasticity of supply. Take the case of a producer of surfboards. The producer’s response to an increase in the price of surfboards depends on its ability to shift resources from the
Background image of page 4
Image of page 5
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

Page1 / 18

Chapters econ - Chapter 1"At the core of economics is the...

This preview shows document pages 1 - 5. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online