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Econ Notes Ch 2 - production technology An outcome is said...

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Markets for goods and services: Firms sell Households buy Firms Produce and sell goods and services Hire and use factors of production Markets for factors of production Households sell Firms buy Households Buy and consume goods and services Own and sell factors of production Assumptions: “perfect world” models that make assuming things eaier Circular-flow diagram: s hows how dollars flow through markets among households and firms Production possibilities frontier: a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available
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Unformatted text preview: production technology An outcome is said to be efficient if the economy is getting all it can from the scarce resources it has available Microeconomics : the study of how housholds and firms make decisions and how they interact in markets Macroeconomics : the study of economy-wide phenomena, including inflation, unemployment, and economic growth Positive statements: claims that attempt to describe the world as is Normative statements : claims that attempt to prescribe how the world should be...
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