ECO 2023 Principles of Microeconomics Chapter 2 Some Tools of the Economist Key Terms:Property rights Production possibilities curve Entrepreneur Law of comparative advantage 6 Goals:#1 - Define and recognize examples of opportunity costs. Opportunity cost is a measure of the next best foregone activity. #2 - Discern why voluntary trade creates value. Voluntary trade creates value, increases wealth, and makes both parties involved in the transaction better off. Transactions costs are a barrier to trade and middlemen serve to reduce transactions costs. #3 - Realize why property rights are key to economic progress. Property rights change behavior in four key ways: (1) private owners assume the gains and costs of using their resources (2) private owners care for their possessions differently than public owners (3) private owners have an incentive to conserve (4) private owners have an incentive to manage their resources responsibly.
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