Chapter 3 - The Fundamental Economic Problem - Scarcity and Choice

Chapter 3 - The Fundamental Economic Problem - Scarcity and Choice

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Chapter 3 The Fundamental Economic Problem: Scarcity and Choice Our necessities are few but our wants are endless. I NSCRI PTI ON ON A FORTUNE COOKI E
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Resources; inputs; factors of production Instruments provided by nature or people Land (Natural resources) Labor Capital Factories, machines Made by people 2
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Resources – scarce People - have less resources Than they would like Choices Must be made Among - limited set of possibilities Have more – one thing Have less – something else 3
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Labor – scarce Time limitations Number of skilled workers – limited Economics – study Use limited means Pursue unlimited ends Opportunity cost - any decision Value of next best alternative - forgone 4
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How much does it really cost? Principle of opportunity cost economics Options available Households & businesses Given - limited resources Logic of How people can make optimal decisions From among competing alternatives 5
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How much does it really cost? With limited resources Decision - have more of one thing Have less of something else Relevant cost of any decision Opportunity cost Value of next best alternative - given up Optimal decision making Based on opportunity-cost calculations 6
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Market - functions well Goods with high opportunity costs Have high money costs Goods with low opportunity costs
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This note was uploaded on 09/23/2009 for the course ECO 108 taught by Professor Wolman during the Spring '08 term at SUNY Stony Brook.

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Chapter 3 - The Fundamental Economic Problem - Scarcity and Choice

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