principals-concepts-chap7

principals-concepts-chap7 - - the chapter uses this...

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Chapter 7 ECO 2013 Core Principles Scarcity Principle - the chapter illustrates how increased income allows to movement of resources to "luxuries" like research and development and a clean environment - a trade- off not as easy in countries with low incomes. Cost-Benefit Principle - the chapter uses this principle to explain how an individual makes the decision to invest in human capital, how a firm will allocate capital, and how the level of research and development are determined. Principle of Comparative Advantage
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Unformatted text preview: - the chapter uses this principle to explain how countries will determine what to produce and where they will sell their products. Not-All-Costs-Count-Equally- the chapter applies the principle of increasing opportunity costs (the low-hanging-fruit principle) to firm decisions. Equilibrium Principle- this principle is applied to the fall of communism and the provision of public education. Important Concepts ! Compound interest ! Diminishing returns to capital ! Entrepreneur...
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