Econ 1BB3 Textbook.docx - Econ 1BB3 Textbook and Videos...

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Econ 1BB3 Textbook and Videos Chapter 1 (not being tested on Normative and Positive Analysis) Definitions: Scarcity : A situation in which unlimited wants exceed the limited resources available to fulfill those wants. - If something is rare or scarce, the more you want it. Marginal analysis : Analysis that involves comparing marginal benefits and marginal costs. - Marginal as extra or additional o What’s the marginal or extra benefit of watching another hour of Netflix vs. the marginal or extra cost of not studying for the econ test Trade Of : The idea that because of scarcity that producing more of one good or service means producing less of another good or service. Opportunity cost : The highest valued alternative that must be given up engaging in an activity. Centrally planned economy : An economy in which the government decides how economic resources will be allocated. Market economy : An economy in which the decisions of households and firms interacting in markets allocate economic resources. Mixed Economy : An economy in which most economic decisions result from the interaction of buyers and sellers in markets, but in which the government plays a significant role in the allocation of resources. - It is a balance of both centrally planned and market economy. Canada is a mixed economy Productive Efficiency : A situation in which a good or service is produced at the lowest possible cost. Allocative Efficiency : A state of the economy in which production is in accordance with consumer preferences.

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