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Unformatted text preview: o Econ 202 Kaitlyn Miller Ch. 1 What are Economic Problems?- Economic problems always exist. Only the nature of them changes- Late 1950s, early 60s- sluggish economy o Curtailed production of goods and services, high unemployment rate of workers and machines o President Kennedy was trying to get the economy moving again- 2 nd half of 60s- high inflation-rapidly rising prices of goods and services- replaced unemployment as main issue- 1973- food rice increase, rise of oil prices- 1974- 12-13 % inflation + unemployment- 1975- unemployment superseded inflation but toward end of 70s reversed- 81-82- unemployment - 83-88- output growth, unemployment declines slightly: deficit problems- Most of the 90s- low unemployment, low inflation, declining budget deficits- 2001-2002- unemployment (started to decline in 2003-6- Economy took a bad turn 2008-09-worst since WW2- 2008- Obama elected and economy = main concern Scarcity- the heart of economics- Scarcity : The study of economics revolves around how ppl satisfy their unlimited wants w/limited resources. Consequently resources must be used efficiently. Resources, or factors of production, are: labor, - Free good : Good available in unlimited quantities. It need not be - Production of goods requires o 1.) Workers/laborers 2.) Machines/capital 3.) Land & materials (Resources/input/factors of production) Choices: Tradeoff- Tradeoff : What one must give up in order to obtain what he or she desires- Opportunity cost : The cost of the next best good or service given up in order to obtain the desired god or service o i.e. going to college/give up $ for tuition + the money you would make in the 4 yrs if you got a job instead Economics & Economists- Economics : Economics is concerned w/ the efficient allocation of limited resources. The questions it deals w/ include: How to insure full employment of resources & how to insure that resources are allocated in a way that the goods and services desired most avidly by society are - There are many economic debated today o Different philosophy or values 1 Conservative economist place great emphasis on price stability and the need to combat inflation Liberal economists are more concerned about unemployment, ranking the objective of full o Economists disagree on technical grounds - Demand for economic advice has increased The 2D Diagram- A tool of Econ. Analysis- 4 Quadrants (p.6)- Supply schedule (p.8)- in a graph w/ quantity measured on the horizontal & price on the vertical axis, the supply curve (straight line sloping to the right) shows that as the price of a good rises, more of it is offered for sale. This is a + - Demand schedule : As the price of a good rises consumers buy less of it. This is shown by a line sloping down to the Economics- what is it?...
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- Spring '09