Econ Chp 1 - Econ Chp 1 Economics the study of how people...

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Econ Chp 1 Economics: the study of how people deal with scarcity Scarcity: the situation in which the quantity of resources is insufficient to meet all wants Choice: a selection among alternative goods, services, or actions Economic interaction: exchanges of goods and services between people Market: an arrangement by which economic exchanges between people take place Maria wants to buy sunglasses and hat for her hike. Two for one deal for $20, she has only brought $20 with her, $20 is her budget constraint. Opportunity Cost: the value of the next-best fogone alternative that was not chosen because something else was chosen Gains from Trade: improvement in income, production, or satisfaction owing to the exchange of goods or services Economic interaction allows for specialization: people concentrating on what they are good at Division of Labor: the division of production into various parts in which different groups of workers specialize Comparative Advantage: a situation in which a person or group can produce one good at a lower opportunity cost than another person or group International Trade: the exchange of goods and services between people or firms in different nations *All individuals face scarcity in one form or another. Scarcity forces people to
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This note was uploaded on 06/26/2008 for the course ECON 101 taught by Professor Gerson during the Fall '08 term at University of Michigan.

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Econ Chp 1 - Econ Chp 1 Economics the study of how people...

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