ECON 200 Study Guide (Test 1)

ECON 200 Study Guide (Test 1) - Antonio Alarcon 2/07/07...

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Antonio Alarcon 2/07/07 ECON 200 Study Guide Chapter 1 Economics is mainly concerned with the material organization of society (what gets produced, how its gets produced, how wealth is distributed, prices, business cycles, economic growth…) Scientific method – The process of making predictions, testing the predictions empirically, and refining theories in response to the empirical results. Two fundamental assumptions: 1) People are selfish (maximize their own self interest) 2) People are rational (make the right decisions to maximize their self-interest) Scientific economics – Practice of making predictions Normative economics – Practice of reaching conclusions about what outcomes are “good” or “bad” Government intervention should be tightly limited and confined to particular areas. Three parts of the economy 1) Firms (producers) 2) Consumers (labor, capital land) 3) Government (taxes) Chapter 2 Profit = Revenue – Costs Revenue = Price * Quantity Cost = (x * P x ) + (y * P y ) + (z * P z ) +… Trade off - Refers to losing one quality or aspect of something in return for gaining another quality or aspect. It implies a decision to be made with full comprehension of both the upside and downside of a particular choice. Firms goal
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This note was uploaded on 04/03/2008 for the course ECON 200 taught by Professor Cramer during the Spring '07 term at Arizona.

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ECON 200 Study Guide (Test 1) - Antonio Alarcon 2/07/07...

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