Economic Study Guide

Economic Study Guide - Economic Study Guide Ch. 1...

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Economic Study Guide Ch. 1 Opportunity cost- cost of any good service, or activity is the value of what must be given up to obtain it; measured in amounts of the actual thing given up not moey Utility- pleasure or satisfaction obtained from consuming a good or service Marginal benefit vs. marginal cost- MC should not exceed MB Scientific method- o observation of facts o formulations of explanations and cause and relationship o testing hypothesis o accept reject or modify hypothesis o continue testing and determination of a theory law principle or model Positive economics- statement avoids value judgment Normative economics- valued judgments about what economy SHOULD be like Budget line - shows combination of 2 products with specific money income o Slope is ratio of price horizontal axis to price on vertical axis o Value of slope measures opportunity cost Direct cost- actual payements vs. indirect cost- forgone wages money Production possibility table/curve- only 2 products
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Economic Study Guide - Economic Study Guide Ch. 1...

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