Econ 2: Exam 1 SS - Economics Definition how to choose among alternatives available bc face scarcity Main Focus of economics • Choice • Unlimited

Econ 2: Exam 1 SS - Economics Definition how to choose...

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Economics Definition: how to choose among alternatives available bc face scarcity Main Focus of economics • Choice • Unlimited wants • Scarcity: not enough goods to satisfy everyone • Opportunity cost: highest value alt u could've made Measured in terms of product GIVING UP We must make choices because resources are scarce Microeconomics vs macroeconomics Micro: consumer choices, firm choices and how indiv make decisions Small indiv units of econ Macro: overall econ Value of using models Model: abstract complexity of real world Models are GOOD (econs like) Assume ceteris paribus Ceteris Paribus: all other things remain = Factors of Production: • Labor • Capitol: been produced and can be used to produce something else NOT $$ All about econ ex= car as uber driver • Natural resources: in natural state in natural source Once touched by humans= NOT natural Human Capital: Experienced training/ed Entrepreneurship: Entrepreneur: person who seeks to earn profits Technology Production Possibilities Model (curve, frontier): assume most efficient when on PPC
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At efficient output cannot produce more of one good without giving up some production of another good Comparative advantage: can produce something at LOWER opp cost than another Law of increasing opportunity cost: bowed out from origin Less steep to steeper ^^PPC is bowed out from origin (law of increasing opportunity cost) Finding market demand from individual demand Demand vs Quantity Demanded Supply vs Quantity supplied Price Floors Price Ceiling rent control Price ceiling: max price set by gov To be productive/effective= needs to be BELOW equil
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