Reveiw_Test_1 - Notes: 2-9-10 Review test 1 Chapter 1:...

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Notes: 2-9-10 Economics T-Th A. Ordonez Review test 1 809-195-3K1C 2/9/10 Chapter 1: Oikonomous - Greek word meaning "one who manages a household" this where the economy comes from. Scarcity - the limited nature of society's resources. Economics - The study of how society manages its resources. Trade-Offs - that which is given up for what is obtained Efficiency - means that society gets the most that it can from limited resources Equity (Equality) - means that the benefits of those resources are distributed fairly among the members of society Opportunity Cost - of an item is what you give up to obtain that item. Marginal Changes - are small incremental adjustments to an existing plan of action. Market Economy - is an economy that allocates its resources through the decentralized decisions of many firms and households as they interact in markets for goods and services. Households decide what to buy and who to work for. Firms decide what to sell and who to hire. Invisible Hand - Adam Smith made the observation that households and firms interacting in markets act as if guided by an invisible hand . Because households and firms look at prices when deciding what to buy and what to sell, they unknowingly take into account the social costs of their actions. As a result, prices
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Notes: 2-9-10 Economics T-Th A. Ordonez Review test 1 809-195-3K1C 2/9/10 guide decision makers to reach outcomes that tend to maximize the welfare of society as a whole. Standard of Living - A countries standard of living depends on its ability to produce goods and services. o Standard of living may be measured in different ways: By comparing personal incomes.
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This note was uploaded on 05/10/2010 for the course ECONOMICS 809-195-3K taught by Professor A.ordonez during the Spring '10 term at Gateway Tech.

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Reveiw_Test_1 - Notes: 2-9-10 Review test 1 Chapter 1:...

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