Chapter 1

Chapter 1 - Chapter 1 Microeconomics- Branch of economics...

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Chapter 1 Microeconomics- Branch of economics that studies how people make decisions and how these decisions interact. Macroeconomics- the study of the overall behavior of the economy Economics-The study of choice under conditions of scarcity -Scarcity: unlimited wants limited resources -Choice: scarcity necessitates choice Principles that underlie the economics of individual choice Resources are scarce Labor Capital (physical, human) Land Entrepreneurship Market Capitalism- US owned by individual, go to goods or service to buy it, dominates Centrally Planned Socialism- state decides everything what price etc Centrally Planned Capitalism- Resources owned privately but distributed by market, told what to produce, US during WWII Market Socialism- Hungary Opportunity cost- the OC of any choice is what we must forgo when we make that choice All costs are ultimately opportunity costs The real cost of something is what you must give up to get it Decisions at the margin “How much” is a decision made at the margin
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This document was uploaded on 10/09/2008.

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Chapter 1 - Chapter 1 Microeconomics- Branch of economics...

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