Econ Review

Econ Review - • GCE how govt wants For whom • Market...

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- Economics- study of choice under conditions of scarcity - Scarcity- limited resources with unlimited wants - Resources- land, labor, capital Capital- machines - Micro Economics- study of the individual parts of the economy Ex. Prices of objects - Macri Economics- study of the economy as a whole Eco growth unemployment Inflation - Economic Systems - Economic systems must deal with scarcity - 2 main types of Economic systems Market (capitalism) Price system Some arrangement where buyers and sellers come together for purpose of exchange Consumer sovereignty- consumer free to choose what he wants to buy Works best under a democracy Conservative theories Government Command Economy Government controls everything Ex. Old china/ Hitler germany - 3 quesetions: What gets produced? Market- What consumers want GCE- what govt wants How it gets produced? Market- Most efficient least cost manner
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Unformatted text preview: • GCE- how govt wants For whom? • Market- whoever values it most assuming they can afford it • GCE- who govt wants-Positive Theories Explains how things actually do work • Objective • Testable Ex. Roses are more expensive during feb 13 th- 14 th-Normative Theories Opinion Subjective Not testable Ex. “poor people are stupid”-Marginal Analysis We assume people are rational in attempt to maximize happiness • Assume people make decisions at the Margin Marginal Analysis- consider the incremental consequences of a bit more of some activity • Consider benefits vs. const of a decision • Marginal benefits: extra benefits of extra activities and marginal costs= extra costs and benefits o Opportunity costs -Production Possibility Curve What is it? • Production possibility curve (frontier)...
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This note was uploaded on 04/02/2008 for the course ECON 101 taught by Professor Miller during the Spring '08 term at Arizona.

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Econ Review - • GCE how govt wants For whom • Market...

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