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ECON 2010-402, Week 2-Book Notes

by: Tawnnie Nicolodemos

ECON 2010-402, Week 2-Book Notes ECON 2010

Marketplace > Salt Lake Community College > Microeconomics > ECON 2010 > ECON 2010 402 Week 2 Book Notes
Tawnnie Nicolodemos
Salt Lake Community College

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About this Document

These notes cover important topics included in Chapter 1.
Principles of Economics: Microeconomics
Pook Rungrudee Carson
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This 2 page Class Notes was uploaded by Tawnnie Nicolodemos on Friday August 26, 2016. The Class Notes belongs to ECON 2010 at Salt Lake Community College taught by Pook Rungrudee Carson in Fall 2016. Since its upload, it has received 8 views. For similar materials see Principles of Economics: Microeconomics in Microeconomics at Salt Lake Community College.

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Date Created: 08/26/16
ECON 2010-Microeconomics Chapter 1 Notes Study Materials L01.1 – Define economics and the features of the economic perspective. Terms and Concepts Opportunity Costs: to obtain more of one thing, society forgoes the opportunity of getting the next best thing Economic Perspective: economic way of thinking Scarcity: resources needed to make goods and services are in limited supply Utility: the pleasure, happiness, or satisfaction obtained from consuming a good or service Marginal Analysis: comparisons of marginal benefits and marginal costs, usually for decision making Summary  Economics evaluates how individuals, institutions, and society make rational choices based on scarcity.  The economic perspective focuses on three main points: o Resource scarcity and the requirement of making choices o The assumption that choices are rational and not chaotic o Comparisons of marginal benefits with marginal costs when making rational choices  By analyzing choices before making them, people incur an opportunity cost. L01.2 – Describe the role of economic theory in economics. Terms and Concepts Scientific Method: method used to evaluate info with the concepts of observe, hypothesize, test, analyze, retest, and theory Economic Principle: a statement about economic behavior or the economy that enables prediction of probable effects Other-Things-Equal Assumption: (ceteris paribus) the assumption that the factors other than those being considered do not change Summary  Economists use the scientific theory to hypothesize and analyze cause-and-effect relationships of data. o That data is then generated into theories, principles, and laws. o These principles are generalizations based on common behavior. o Economists then combine theories into representations and graphical expressions called models. L01.3 – Distinguish microeconomics from macroeconomics and positive economics from normative economics. Terms and Concepts Microeconomics: examines decision making by individual customers, workers, households, and business firms Macroeconomics: examines performance and behavior of the economy as a whole Aggregate: a collection of specific economic units treated as if they were one unit Positive Economics: examines facts and cause-and-effect relationships Normative Economics: incorporates value judgments about what the economy should look like; what a particular policy should be recommended to achieve a desirable goal L01.4 – Explain the individual’s economizing problem and how trade-offs, opportunity costs, and attainable combinations can be illustrated with budget lines. Terms and Concepts Economizing Problem: the need to make choices because economic wants exceed economic means Budget Line: a schedule or curve that shows various combinations of two products a consumer can purchase with a specific money income Summary  Graphically, a budget line illustrates this dilemma by showing various combinations of two products that a consumer can purchase based on income, given the prices of the products. o A straight line budget implies constant opportunity costs for both products. L01.5 – List the categories of scarce resources and delineate the nature of society’s economizing problem. Terms and Concepts Economic Resources: all natural, human, and manufactured resources that go into the production of goods and services Land: all natural resources used in the production process of goods and services Labor: the physical actions and mental activities that people contribute to the production of goods and services Capital: all manufactured aids used in producing consumer goods and services Investment: spending to pay for the production and accumulation of capital goods Entrepreneurial Ability: human resource that combines all other economic resources to produce new products or make innovations to existing products Entrepreneurs: individuals who provide entrepreneurial ability to firms by setting strategy, advancing innovations, and bearing financial risk of the firm does poorly Summary  Society’s economizing problem is illustrated through production possibility tables. o They show different combinations of goods and services that can be produced in a fully employed economy. L01.6 – Apply production possibilities analysis, increasing opportunity costs, and economic growth. Terms and Concepts Consumer Goods: products that satisfy our wants directly Capital Goods: products that satisfy our wants indirectly by creating more efficient production of consumer goods Production Possibilities Curve: displays different combinations of goods and services that society can produce in a fully employed economy Law of Increasing Opportunity Costs: as the production of a particular good increases, the opportunity cost of producing an additional unit rises LO1.7 – Explain how economic growth and international trade increase consumption possibilities. Terms and Concepts Economic Growth: a larger total output


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