ECO304K Ch 1-2 Notes - ECO304K Chapters 1-2 I. II. Graphs...

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I. Graphs a. When slope (a) = 0, the curve is perfectly elastic II. Definitions a. Economy = economy of exchange… In order for production to take place (and, therefore, for exchange to take place) we need factors of production: i. Natural resources rent ii. Capital interest iii. Entrepreneurs profit iv. Labor wages b. 2 Types of Economies i. Macro – studies performance of country or group of countries by concentrating on broad issues (inflation, unemployment, growth, poverty, crises, cause/effects of globalization, technology, environment) 1. Historical, sociological, political dimensions 2. Modern macro developed in UK in 30s ii. Micro – study of individuals (consumers, businesses), their actions and their interactions (modern micro developed in UK in 1776) iii. Often seen as opposing theories (i.e. government and economic policies) 1. Micro – business-oriented (individual firm, market, etc. = element of study)… want lower regulation, lower taxes, and lower government 2. Macro – concerned with aggregate analysis (can cover market analysis also)… promotes specific types of regulation/policies aimed at counterbalancing market failures III. Fundamental question of microeconomics = How do people make choices in a world of scarcity?
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This note was uploaded on 04/16/2008 for the course ECON 304K taught by Professor Ledyard during the Spring '08 term at University of Texas at Austin.

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ECO304K Ch 1-2 Notes - ECO304K Chapters 1-2 I. II. Graphs...

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