Exam 1review - Exam 1 1. the study of how society manages...

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Exam 1 1. the study of how society manages its scarce resources; people face trade-offs?(pg 4) 2. micro-the detailed study of how households and firms makes decisions and how they interact in specific markets; macro-the study of an economy-wide phenomena (27) 3. what you give up to get something ex: going to college or staying home and working 4.production possibilities frontier-a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology; where the economy wants to put its resources; the 2 endpoints represent the two extremes of producing only one item(pg. 24) 5.? 6.-people face trade-offs ex:guns and butter -the cost of something is what you give up to get it; opportunity cost -rational people think at the margin; compare marginal benefits vs. marginal costs, ex:airline tickets -people respond to incentives, ex:something that induces a person to act….eating more pears when the price of apples rises -trade can make everyone better off; some people are better at producing one thing than others -markets are usually a good way to organize economic activity -governments can sometimes improve market outcomes (11) 7.different ways to represent a given relationship=table, equation, graph 8. 9.
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Exam 1review - Exam 1 1. the study of how society manages...

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