Midterm 1- Chapters 1-2

Midterm 1- Chapters 1-2 - Chapter name • Chapters 1-2 •...

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Unformatted text preview: Chapter name • Chapters 1-2 • 1. Ten Principles of Economics 1. Thinking Like an Economist • Chapters 1-2 Study Checklist: • Required reading : – Chapter 1: pages 3-14, 17-18 – Chapter 2: pages 21-26, 29-38 – Chapter 2 Appendix: pages 40-48 • Online practice quiz questions : – Chapter 1: #1, 2, 4, 5, 6, 7 • Introduction to Economics: • Economics is about making choices. • A household and an economy face many decisions: – Who will work? – What goods & services and how many of them should be produced? – What resources should be used in production? – At what price should the goods & services • 33 • The Economic Problem: • Would you like to have a nicer house or car? • Would you like more money, leisure, or sleep? • Our wants and desires are virtually unlimited, but the resources available to satisfy these wants are scarce. • The management of society’s resources • 44 • Society and Scarce Resources: • When is a good scarce in society? - • Question: If there was only 1 diamond left in the world, would it be a scarce good? • Answer: if, and only if: – quantity demanded> quantity supplied • at a price of zero • 55 • Society and Scarce Resources: • Question: What percentage of economies in the world face scarcity? • Answer: 100% – Every person and every country faces some sort, or some level, of scarcity. • Resources are scarce • Time is scarce – time is the ultimate constraint – There are only 24 hours in a day – Bill Gates’ time is probably scarce h • Society and Scarce Resources: • Economics: – The study of how people use their scarce resources to satisfy their unlimited wants. The Economic Problem is scarcity (this will likely be an exam question) • Resources: • 77 • Factors of Production – 3 main ones: • Inputs used to produce goods and services (G/S) 1. Land (natural resources)- rents • Water, land, minerals, trees, etc 2. Labor- wages • Physical and mental services of people 3. Capital- interest • 88 • Factors of Production – 2 more: 4. Entrepreneurship- entrepreneurial ability- profit • The innovator or inventor – “innovate or stagnate” • Thinks up product and makes decisions needed to make it. • Assumes the risk of profit or losses. • The entrepreneur is the residual claimant. – He/ she benefits from what’s left over after paying for other resources. 5. Technology • 99 • Goods and Services (G/S): • Good: – A tangible product used to satisfy human wants. – Ex) food, books, cars, chairs, clothes, computers • Service: – An activity, or intangible product, used to satisfy human wants. – Ex) lectures, movies, phone service, • 1010 • Markets: • Market: – A set of arrangements by which buyers and sellers carry out exchanges at mutually agreeable terms....
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This note was uploaded on 09/23/2011 for the course ECON 2106 taught by Professor Trandel during the Spring '07 term at UGA.

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Midterm 1- Chapters 1-2 - Chapter name • Chapters 1-2 •...

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