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Macro 1 - government plays an important role in overseeing...

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1. Economic Issues (Chap 1) -Economics is the study of how societies use scarce resources to produce valuable goods and services and distribute them among different individuals. -Scarcity: limited resources -Efficiency: most effective use of a society’s resources -Economic efficiency requires than economy produce the highest combination of quantity and quality of goods and serves given its technology and scarce resources. An economy is producing efficiently when no individual’s economic welfare can be improved unless someone else is made worse off. The Three Problems of Economic Organization -What, how, and for whom -Economic life is organized either through hierarchal demand or decentralized voluntary markets. Today most decisions in the US and other high-income economies are made in the market place. But the
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Unformatted text preview: government plays an important role in overseeing the functioning of the market; governments pass laws that regulate economic life. Society’s Technological Possibilities-Inputs: commodities or serves that are used to produce goods and services-Outputs: the various useful goods are services that result from the production process and are either consumed or employed in the further production.-Factors of production: labor, land, and capital-The opportunity cost of a decision is the value of the good or service foregone-Productive efficiency occurs when an economy cannot produce more of one good without producing less of another good; this implies that the economy is on its PPF...
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