Chapter 2 - TheEconomicProblem:ScarcityandChoice...

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The Economic Problem: Scarcity and Choice  CHAPTER OVERVIEW This chapter begins with a brief comparison of the command and market systems,  transitioning quickly to a discussion of the institutional framework of the American  market system. Brief explanations are given for these characteristics of the market  system: private property, freedom of enterprise and choice, the role of self-interest,  competition, markets and prices, the reliance on technology and capital goods,  specialization, use of money, and the active, but limited role of government. For society  we develop production possibilities model. We then look at the economizing problem  from both an individual and societal perspective. In our discussion of production  possibilities, the concepts of opportunity costs and increasing opportunity costs,  unemployment, growth, and present vs. future possibilities are all demonstrated. We  also include the basic principles underlying the global economy. COMMENTS 1. On the level of personal decision-making, list all of the economic choices that you  had to make today or this week. Marshall said in the 1890s, “economics is the study of 
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