Econ 101 Chapter 1 Notes

Econ 101 Chapter 1 Notes - Value of the next best thing...

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Econ 101 Chapter 1 -People make purposeful choices with scarce resources, to interact with other people when they make these choices. Economics is mostly the study of how people deal with scarcity. Vocab – Scarcity – A situation in which people’s resources are limited. Choice – To give up one thing in favor of another Economic Interaction – anytime people trade or exchange goods or services Market – An arrangement where buyers and sellers can interact. Budget Constraint – A limit in the amount a buyer can spend Opportunity Cost – the value of the foregone alternative that was not chosen.
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Unformatted text preview: Value of the next best thing Gains from trade the reallocation of goods between two individuals in which both benefit. Comparative Advantage A group has a comparative advantage if they can produce the same amount of the good, using fewer resources, less time or effort. International Trade Economic interaction between groups from different countries. Economic interaction allows for specialization by creating a Division of labor which involves one worker specializing in one task and another in another task....
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This note was uploaded on 04/02/2008 for the course ECON 101 taught by Professor Gerson during the Fall '08 term at University of Michigan.

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