Test 1 Review

Test 1 Review - Chapter 1 -Economics-the study of choice...

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-Economics-the study of choice under conditions of scarcity -Labor- time ppl spend producing goods -Capital physical- machinery and equipment human- skills and knowledge possessed by workers capital stock- total # nations’ capital made in previous periods -Land- physical space where production is and natural resources in or under it- oil, iron, coal, soil -Entrepreneurship- the ability to combine other resources to produce new enterprises –land labor and capital together -Positive Economics- study how the economy works # -Normative- what it should be – make judgments on the economy and prescribe possible solutions -Simplifying v. critical assumptions- s- any assumption that makes a model simpler without changing the conclusions- critical assumptions that affect the con. of a model Chapter 2 - OC- what is given up when making a choice- both explicit ($ paid) and implicit (things not of $, hours could have been working or doing something else, take the second best option) -PPF- showing all combinations of goods that can be produced with resources and technology -Absolute advantage- ability to produce a good/ service better than other ppl -Traditional econ- economy where resources are allocated from long lived practices -Command/ central planned economy- where resources are allocated by specific instructions from central authority -market economy where things are allocated b/c of individual decision making -communism- economic system where things are owned in common -socialism- where most resources are owned by the state -capitalism- resources owned privately Chapter 3 -aggregation- combining distinct things into single whole -product markets- markets which firms sell goods/ services to households -resource markets- markets where households own resources (land, capital, labor) sell them to firms -imperfectly competitive markets- buyers and sellers can change the price
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This note was uploaded on 12/09/2008 for the course ECON Macro 1 taught by Professor Kitzi during the Spring '07 term at NYU.

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Test 1 Review - Chapter 1 -Economics-the study of choice...

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