ECO 2620 Micro. - Study Guide #1 (Chp. 1 & 2)

ECO 2620 Micro. - Study Guide #1 (Chp. 1 & 2) - ECO...

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ECO 2620 – Winter 2013 Study Questions Worksheet #1 for Chp. 1 & 2 1) Define: Microeconomics – study of economic behavior of individuals Economics – study of how a society allocates/distributes its scarce factors of production among different possible uses. Scarcity – limited factors of production (Limits Final products that can be produced VS. unlimited human wants) Factors of Production – inputs that are combined in order to produce Final products 2) List the Factors of Production: A) Land – (natural resources) B) Labor – (all human work effort) C) Capital – (factories, tools) D) Entrepreneurship – (organizer, risk taker) 3) Define:
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Unformatted text preview: Market Economy – Economic decisions based on supply-demand (market forces) price, income, profit • Mixed Economy – mostly market economy but some government involvement • Opportunity cost – whatever opportunity was “given up” or not taken when making a decision • Marginal Cost – “change in” COST of making a decision • Marginal Benefit – “change in” BENEFIT of making a decision 4) What is the marginal principle of decision-making? • Weigh marginal benefits vs. marginal costs. Example: o Buying a book from OCC (here at school) $50 vs. o Buying a book from a bookstore in Canton (long distance away) $15...
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