MACROECONOMICS - MICROECONOMICS Economics is. the study of...

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MICROECONOMICS  Economics is… the study of choices; how we try to satisfy our unlimited wants w/our limited  resources  2 branches:  1) Macro : choices of a country/gov’t  2) Micro : choices of a person or business  Economics in 7 words: “there’s no such thing as a free lunch” Nothing is ever free  Opportunity cost :  what you give up in order to get something else  - Maximize profits  - More is better - Margins (increasing production), if necessary Factors affecting production  1) People face tradeoffs 2) Cost of something is what you give up in order to get it 3) Rational people to think at the margin   making choices 4) People respond to incentives 5) Trade is a win-win situation  6) Markets are usually a good way to organize economic activity  7) Gov’t can sometimes improve market outcomes  - Pollution   gov’t regulation  - A free market would allow businesses to dispose of pollution wherever  they want 
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8) Country’s standard of living depends on its ability to produce goods and services  potential to produce  9) Productivity is almost everything in the long run  - Output/worker hour  - Capital (machinery)  10)Prices rise when gov’t’s create too much $ 11)Society faces a short term/run tradeoff between inflation and unemployment (always  facing one or the other)
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MACROECONOMICS - MICROECONOMICS Economics is. the study of...

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