Test 1 Study guide - Test 1 Study guide 1. Describe the Law...

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Test 1 Study guide 1. Describe the Law of Tannstafal a. The law states that there is a price for everything, if you decide to do one thing you give up something else which is the cost of doing that. b. “there is no such thing as a free lunch” 2. Define Economics and explain the definition a. The social science concerned with the efficient use of limited resources to achieve maximum satisfaction of unlimited material wants. 3. What is the “economy”? Explain the meaning of “the institutional structure: a. The institutional structure (physical and mental) through which people coordinate their need. b. The institutional structure consists of two aspects which are physical and mental. i. Physical is where people in the economy do their buying/selling ii. Mental is determined by the culture of the people 1. norms 2. values and beliefs are based on the beliefs of the economy a. an example is not selling meat on Friday back in the day. 4. What are the two aspects of scarcity? a. Limited resources b. Unlimited wants 5. Describe the coordination problems of an economy: a. What to Produce? i. There is the question what should one produce. The obvious answer would be what people want most. b. How to produce it? i. Trying to produce the item at the lowest possible cost is what the person will try to achieve. c.
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Test 1 Study guide - Test 1 Study guide 1. Describe the Law...

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