III. Aristotle and Friendship:
v In the Nichomachean Ethics, Aristotle says that every art and every inquiry, and similarly
every action as well as every choice, is held to aim at some good.
v Happiness is the highest form of the good.
v The contemplative
Introduction to Economics
Economics Study of how a human community provides for its wants
Economic Problem- Unlimited wants, scarce resources
Resources: land, capital, labor, entrepreneurship
Productive Efficiency max output, min input
Firms Costs of Production
What is the relationship between TC, VC, and FC?
Total cost (TC): Equals fixed cost plus variable costs. TC = FC + VC.
Variable cost (VC): Are the costs paid to the variable input. (Inputs include labor,
Positive (underproduced) and negative (overproduced) externalities:
Social benefit or Social cost-third party effects of economic decisions (increase in
education/increase in pollution)
Policies: underproduced-subsidize (vaccines or education); overpro
Suppose that you are faced with an economy in an overexpansion. A) Suggest a specific
fiscal policy to alleviate this crisis. B) Illustrate, using the AD/AS model what impact your
policy will have and describe how it will impact the three macro variabl
1. What is the formula for calculating GDP from the income approach?
GDP = compensation of employees + gross operating surplus + gross mixed income + taxes less
subsidies on production and imports
2. Give at least two reasons why the statistical discrepan