2 Book Notes – Econ 201

2 Book Notes – Econ 201 - 2 Book Notes Econ...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
2 Book Notes – Econ 201 Economists use the scientific method. In economics, conducting an experiment is nearly impossible. Assumptions can simplify the complex world and make it easier to understand. The art in scientific thinking is deciding which assumptions to make. Economists use models to show their assumptions and help to simplify reality and improve our understanding of it. Circular Flow Diagram: a visual model of the economy that shows how dollars flow through markets among households and firms Factors of production: LLCE **PAGE 25, CIRCULAR FLOW DIAGRAM LOOK AT!!** Production Possibilities Curve (Frontier): a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology. (^MSU Flags v. Cans of Coke example during lecture) Inefficient outcome is when the point of production is less that the maximum output. Choosing what to produce is a tradeoff.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

2 Book Notes – Econ 201 - 2 Book Notes Econ...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online