econ - Chapter 1 What is Economics -economics is the social...

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Chapter 1 What is Economics -economics is the social science that examines how individuals, institutions, and society make optimal choices under conditions of scarcity What is scarcity? What is Macro and Micro? Macro- Micro- Positive and Normative economics? normative-) positive- Can you determine between macro and micro? Production possibility curve (Budget Line). (pg 11- 15) -Budget line- Chapter 2 What is the economic system? (pg 29-31) - A particular set of institutional arrangements and a coordinating mechanism - differ as to (1) who owns the factors of production and (2) the method used to motivate, coordinate, and direct economic activity Capitalism- free economy 1. private property - property rights encourage investment, innovation, exchange, maintenance of property, and economic growth 2. competition 3. freedom of choice - able to buy goods and services that satisfy their wants. Communism- command economy 1. everything is owned by government (underground and above ground)
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2. government does all decision making (including the use of the countries
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econ - Chapter 1 What is Economics -economics is the social...

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