Micro2SG

Micro2SG - #4 - Illustrate the concepts of tradeoffs,...

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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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Unformatted text preview: #4 - Illustrate the concepts of tradeoffs, opportunity costs, and growth. A production possibilities curve is a graphical representation of opportunity cost and can be extended to illustrate the concepts of inefficiency and economic growth. #5 - Recognize that specialization and division of labor lead to higher output levels and living standards. The production possibilities curve can also be extended to illustrate the concepts of gains from specialization and division of labor. The law of comparative advantage and trade makes it possible to exploit mass production and innovative ideas. #6 - List societys three questions and specify the kinds of economic organizations. Every society must answer three questions: (1) what will be produced? (2) how will it be produced? (3) for whom will it be produced? There are two basic kinds of economic organization, market organization and political planning....
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This note was uploaded on 04/13/2008 for the course ECO 2023 taught by Professor Mccaleb during the Spring '08 term at FSU.

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Micro2SG - #4 - Illustrate the concepts of tradeoffs,...

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