First Review - Review For Chapters 1-4 Definitions-1...

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Review For Chapters 1-4
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Definitions-1 Economics – the study of how humans deal with the problem of scarcity. Scarcity – an unlimited number of imagined uses for a limited quantity of resources. Recognition – Hegel’s explanation for the human need to be appreciated and understood by others. Provides the basis for scarcity.
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Definitions-2 Economic Efficiency – a measure of how well scarce resources are managed. Allocative Efficiency – using scarce resources to produce the most-wanted goods and services. Productive Efficiency – using least-cost production methods and carefully managing scarce resources in production.
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Definitions-3 Pareto Improvement – someone is made better off without harming anyone else. Institution – a set of humanly derived constraints that structure human interaction. Institutional Efficiency – a measure of how well an institution manages uncertainty. Uncertainty – a lack of knowledge about the future.
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Definitions-4 Symbolic Artifact – a means of preserving thought. Absolute Advantage – the production of a good or service by the person who is most qualified, skilled or competent to produce that output. Comparative Advantage – the production of a good or service by the person who is the least-cost producer of that output.
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Definitions-5 Self-sufficiency – an individual produces everything that she or he consumes. Specialization – an individual produces only some of what she or he consumes. Trade – the exchange of goods and services. Market – an institution that facilitates trade.
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Definitions-6 Competition – the result of individuals seeking to maximize personal welfare in markets. Conflict – the result of individuals seeking to maximize personal welfare in unconstrained environments. Prisoner’s Dilemma – a description of the consequences of conflict.
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Definitions-7 Iterated Prisoner’s Dilemma – the prisoner’s dilemma when individuals have a continuing association with one another.
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First Review - Review For Chapters 1-4 Definitions-1...

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