New User Special Price Expires in

Let's log you in.

Sign in with Facebook


Don't have a StudySoup account? Create one here!


Create a StudySoup account

Be part of our community, it's free to join!

Sign up with Facebook


Create your account
By creating an account you agree to StudySoup's terms and conditions and privacy policy

Already have a StudySoup account? Login here

Chapter 1: The Art and Science of Economic Analysis

by: David Falcone

Chapter 1: The Art and Science of Economic Analysis ECON 2005

Marketplace > Virginia Polytechnic Institute and State University > ECON 2005 > Chapter 1 The Art and Science of Economic Analysis
David Falcone
Virginia Tech

Preview These Notes for FREE

Get a free preview of these Notes, just enter your email below.

Unlock Preview
Unlock Preview

Preview these materials now for free

Why put in your email? Get access to more of this material and other relevant free materials for your school

View Preview

About this Document

Covers all information Chapter 1: The Art and Science of Economic Analysis that will be on Exam 1.
Principles of Economics
Steve Trost
Class Notes
resources, goods, services, Households, firms, circular, flow, Positive, normative
25 ?




Popular in Principles of Economics

Popular in Department

This 4 page Class Notes was uploaded by David Falcone on Wednesday September 7, 2016. The Class Notes belongs to ECON 2005 at Virginia Polytechnic Institute and State University taught by Steve Trost in Fall 2015. Since its upload, it has received 6 views.

Similar to ECON 2005 at Virginia Tech


Reviews for Chapter 1: The Art and Science of Economic Analysis


Report this Material


What is Karma?


Karma is the currency of StudySoup.

You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!

Date Created: 09/07/16
Chapter 1: The Art and Science of Economic Analysis  Resources= used to produce what people want o 4 broad categories of resources  Labor  Human effort  Capital  All human creations used to produce goods and services  Physical Capital o Factories, tools, machines, computers, buildings, airports, highways, and other human creations used to produce goods and services. o Everything we as ppl use  Human Capital o Knowledge and skill  Entrepreneurial ability  Creating a new product or idea and risking resources to employ it  Natural Resources  Goods and Services o Goods= material o Services= more an idea/ intangible o Goods and services are produced using resources so they are scarce themselves  Scarcity  No such thing as a free lunch o There is always a cost, might not be to you but there is a cost to someone or something  Economic Decision Makers o 4 types of decision makers in the economy  Households  Households demand goods and are the focus of economics  Firms  Governments  Everyone else  All of the above, besides households, use the resources that households supply and supply the goods and services that households demand  Everyone else includes foreign govts and households that supply the US with goods and services and demand resources and products from the US o Markets  The means by which buyers and sellers can carry out exchange  They bring together the buyer and seller  Markets determine price, quantity and quality  Goods and services are sold in Product Markets  Resources are sold in Resource Markets  Most important resource market is the job market  Circular Flow Model o  Households supply labor, capital, natural resources, and entrepreneurial abilities to firms through resource markets o Households demand products from firms from the product market o Firms supply goods and services through the product market to households o Firms demand labor, capital, nat resources, and entrepreneurial ability from households through the resource market o Firms get money for products o Households get money for services  Rational Self Interest o People make the best choices they can o Max the benefit and min the cost to get best result  Ppl look out for themselves  Choice Requires Time and Info o You need time and info to make educated choices o We pay some ppl to get info for us  Stock broker  Economic Analysis is Marginal Analysis o Economic choice is based on a comparison of the expected marginal benefit and the expected marginal cost of the action under consideration o Marginal means incremental, additional, or extra. Marginal refers to a change in an economic variable, a change in the status quo.  The Science of Economic Analysis o Economic theory or model= makes predictions about the real world  May be better with less detail so that things don’t become too complex  Only the important elements are included  The Scientific Method o Four steps to the Scientific Method  Normative vs. Positive o Postive= something that can be accepted or rejected after reffering to facts o Normative= Reflects and opinion  Should be, ought to be  Not necessarily true  The Fallacy of Association is Causation o The fact that one event precedes another or that two events occur simultaneously does not always mean that one causes another  The Fallacy of Composition o An erroneous belief that what is true for the individual, or the part, is also true for the group, or the whole.  The Mistake of Ignoring the Secondary Effects o The unintended consequences of a policy or decision 


Buy Material

Are you sure you want to buy this material for

25 Karma

Buy Material

BOOM! Enjoy Your Free Notes!

We've added these Notes to your profile, click here to view them now.


You're already Subscribed!

Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'

Why people love StudySoup

Steve Martinelli UC Los Angeles

"There's no way I would have passed my Organic Chemistry class this semester without the notes and study guides I got from StudySoup."

Amaris Trozzo George Washington University

"I made $350 in just two days after posting my first study guide."

Bentley McCaw University of Florida

"I was shooting for a perfect 4.0 GPA this semester. Having StudySoup as a study aid was critical to helping me achieve my goal...and I nailed it!"

Parker Thompson 500 Startups

"It's a great way for students to improve their educational experience and it seemed like a product that everybody wants, so all the people participating are winning."

Become an Elite Notetaker and start selling your notes online!

Refund Policy


All subscriptions to StudySoup are paid in full at the time of subscribing. To change your credit card information or to cancel your subscription, go to "Edit Settings". All credit card information will be available there. If you should decide to cancel your subscription, it will continue to be valid until the next payment period, as all payments for the current period were made in advance. For special circumstances, please email


StudySoup has more than 1 million course-specific study resources to help students study smarter. If you’re having trouble finding what you’re looking for, our customer support team can help you find what you need! Feel free to contact them here:

Recurring Subscriptions: If you have canceled your recurring subscription on the day of renewal and have not downloaded any documents, you may request a refund by submitting an email to

Satisfaction Guarantee: If you’re not satisfied with your subscription, you can contact us for further help. Contact must be made within 3 business days of your subscription purchase and your refund request will be subject for review.

Please Note: Refunds can never be provided more than 30 days after the initial purchase date regardless of your activity on the site.