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Unformatted text preview: Chapter 1: Economics: Foundations and Models Scarcity, Economics 1. People are Rational 2. People respond to Economic Incentives 3. Optimal decisions are made at the margin. Trade-offs force society to answer three fundamental questions: 1. What goods and services will be produced? 2. How will the goods and services be produced? 3. Who will receive the goods and services? Centrally Planned Economies versus Market Economies The Modern Mixed Economy Microeconomics and Macroeconomics Solve 4.2 pg 23 Chapter 2: Tradeoffs, Comparative Advantage and the Market System Production Possibilities Frontier (PPF) Opportunity costs Constant and Increasing opportunity costs (with Graphs) Identification of inefficient, efficient, feasible and unattainable points from a PPF graph. Solve 1.8 a, b, c only pg 61 Economic growth and shifts in PPF Solve 1.4 pg 60 Page 1 of 3...
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