REVIEW FOR ECON 2006

REVIEW FOR ECON 2006 - REVIEW FOR ECON 2006 Economics-the study of how individuals and societies choose to use the scarce resources that nature and

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1/16/08 REVIEW FOR ECON 2006 Economics-the study of how individuals and societies choose to use the scarce resources that nature and previous generations have provided *Economics is the science that studies the allocation of scarce resources between their competing uses -opportunity cost is the best alternative that we forgo, or give up, when we make a choice or decision. -nearly all decisions involve trade-offs. Microeconomics-is the branch of economics that examines the behavior of individual decision-making units-that is, business firms and households Macroeconomics-is the branch of economics that examines the behavior of economic aggregates (totals) -income, output, employment, and so on-on a national scale. *the key behind the difference is the individual vs. the total scarcity, choice, and opportunity cost -human wants are unlimited, but resources are not. -3 basic questions must be answered in order to understand an economic system: -what gets produced? -how is it produced? -who gets what is produced? -how much do we produce? *the answer is by looking at supply and demand capital goods and consumer goods capital goods-are goods used to produce other goods and services(machine in a factory) consumer goods-are goods produced for present consumption stock market shares are not examples of capital goods production possibility frontier PPF-graph that shows all of the combinations of goods and services that can be produced if all of a society’s are producing at their efficient level.you need to have a society’s
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This note was uploaded on 03/30/2008 for the course ECON 2005 taught by Professor Zirkle during the Fall '07 term at Virginia Tech.

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REVIEW FOR ECON 2006 - REVIEW FOR ECON 2006 Economics-the study of how individuals and societies choose to use the scarce resources that nature and

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