chapter 1 power point

chapter 1 power point - Chapter 1 Economics Models and...

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Click to edit Master subtitle style 11 Chapter 1 Economics: Models and Foundations
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22 Introductory Concepts n Scarcity means: n Resources are scarce, but human wants are: n Scare resources and unlimited wants imply the need to make: n Economics The study of the choices people make to attain their goals, given their scarce resources.
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n Most economic events occur “markets”. Markets involve: Three Key Economic Principles n People are rational . n People respond to economic incentives. n Optimal decisions are made at the margin. 33
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44 The Economic Problem That Every Society Must Solve n Resources are limited and desires are unlimited, so society faces trade-offs . n How to evaluate trade-offs? Compare the benefits of an activity to the opportunity cost of the activity Opportunity cost The highest-valued alternative that must be given up to engage in an activity. Examples : What is the opportunity cost of going to an Aggie basketball game?
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What is the opportunity cost of coming to class today? What is the opportunity cost of one semester of college?
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chapter 1 power point - Chapter 1 Economics Models and...

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