Allocation of scarce resources: refers to societys decisions on how to divide its
scarce input resources among the different outputs produced in the economy and
among the different firms or other organizations that produce those outp
ECONOMICS EXTRA CREDIT Pg 122 Discussion Questions
1. If an earthquake destroys some of the factories in Poorland, what happens to Poorlands
potential GDP? What happens to Poorlands GDP if it acquires some new
Econ Chapter 7-8 Terms
Capital: A nations capital is its available supply of plant, equipment, and software. It
is the result of past decisions to make investments in these items.
Capital formation: is synonymous with investment. It refers to t
Economics- transfer of goods and service
Economic Abstraction- simplifying the complexities of the real world by hopefully ignoring the
unimportant details while doing economic analysis.
Example: a map shows where different rest stops, intersections etc,