exam 1 study sheet

exam 1 study sheet - STUDY OBJECTIVES FOR FIRST SECTION 1....

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STUDY OBJECTIVES FOR FIRST SECTION 1. Define the terms “scarcity,” “resource,” and “goods and services.” Explain the relationship between scarcity and the need to make tradeoffs. -scarcity-limited nature of society’s resources -resource-anything used to make goods and services (natural resources, labor, capital) -goods and services-anything that makes an indiv. Better off **- 2. Distinguish between positive and normative ideas and between macroeconomics and microeconomics. -micro-study of how households and firms make dedisions and how they interact in markets -macro- study of ecnomy wide phenomena including inflation unemployment and economic growth -Positive- how things works-logical consequences of events things that could be tested -normative-alternative-involves value judgements-ideas of fairness **3. Explain and be able to use the rational-choice approach to economic decision-making. In particular, discuss the idea of opportunity cost. -if the benefits outway the costs then yes **4. Draw and explain the basic Circular Flow diagram. -a schematic representation of the organization of the economy -decisions are made by households and firms -households and firms interact in the markets for goods and services (where households are buyers and firms are sellers) and in markets for the factors of production (where firms are buyers and households are sellers)
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exam 1 study sheet - STUDY OBJECTIVES FOR FIRST SECTION 1....

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