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8.30 Chapter 2 - Econ 101 Introduction to Microeconomics...

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Click to edit Master subtitle style Econ 101 Introduction to Microeconomics Professor Richard V. Burkhauser 2 Thinking Like an Economist
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Econ 101 – Professor Burkhauser Key Concepts circular-flow diagram, p. 22 production possibilities frontier, p. 24 microeconomics, p. 27 macroeconomics, p. 27 positive statements, p. 28 normative statements, p. 28
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Econ 101 – Professor Burkhauser Figure 2.1 The Circular Flow Spen ding Goods and servi ces bo ug ht Reve nue Go od s and services s o l d Labor, land, and capital Inc om e = Flow of inputs and outputs = Flow of dollars Factor s of produc tion Wages, rent, and profit FIR MS Produce and sell goods and services Hire and use factors of productio n Buy and consume goods and services Own and sell factors of productio n HOUSEHO LDS Households sell Firms buy MARK ETS F O R FACTORS OF PRODUCTION Firms sell Households buy MARK ETS F O R GOODS AND SERVICES
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Econ 101 – Professor Burkhauser Question 2.1: Scarcity It is said that the U.S. is an “economy of scarcity”. This statement: a) is false, because the U.S. is one of the richest countries the world has ever known b) is false, because the resources that are scarce in the U.S. can always be imported from abroad c) is true, because our resources are not sufficient to realize all of our goals d) is true, but only temporarily – in the future, we will probably have adequate resources to achieve all our goals
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