Econ1020: Limits And Choices
Econ1020: Limits And Choices Econ 1020
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This 2 page Class Notes was uploaded by Janelle Darby on Wednesday September 7, 2016. The Class Notes belongs to Econ 1020 at Robert Morris University taught by Zhou Yang in Fall 2016. Since its upload, it has received 49 views. For similar materials see Principles of Macroeconomics in Economics at Robert Morris University.
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Date Created: 09/07/16
Limits and Choices Tuesday, September 6, 2016 5:10 PM Economy Finite quantity Opportunity cost: must give up something to receive something greater o Ex: time Rational Self-interest(s-int): Max utility (satisfaction/ happy) Firms max profits o Profits (net return) Marginal Analysis: looks at incremental change Change in profit o Ex: hiring a new worker (change total cost) Marginal benefit: benefiting by incremental change Marginal cost: an increase in benefit o What are you losing? Other- things- equal assumption: common assumption used in econ analysis. Used to identify the relation b/w 2 specific variables: price& quantity The production possibilities frontier: a curve depicting all max output possibilities for two goods given a set of inputs consisting of resources and other factors Microeconomics: individual parts of the economy Macroeconomics: looks at the economy as a whole Aggregated behavior: summation of individual behavior Positive Economy: focuses on facts and cause and effect relationships Normative: What should you do to achieve a goal; desirability of certain aspects of the economy Constraints Budget line: the goods an individual can consume given their budget o Given the Budget info you can come up with combinations within your budget line Margin line: shows the max amount of items an individual can buy within their budget o Credit: can change what is attainable in a budget Societies Resources o Factors of production Land: includes all natural resources used in the production process Ex: forest, mineral and oil deposits, water resources, wind power, sunlight, and arable land Labor: physical actions and mental activities that people contribute to the production of goods and services Ex: logger, retail clerk, mechanist, teacher Capital: manufactured aids used in producing consumer goods and services Ex: factories, transportation, storage, distribution facilities Entrepreneurial Ability: human production Takes initiative in combining the resources of land Makes strategic business decisions that set the course of an enterprise Bears risks Production Possibilities Model Production choices Assumptions o Full employment: utilizing all available resources o Fixed Resources: quantity and quality of the factors of production are constant o Fixed Technology: the methods used to produce output is constant o Two goods: Supply and demand model Possible combinations society can output Unattainable: not enough technology to compose the resources Points on the line of the graph are the max Law of increasing opportunity costs: production of particular goods increases the opportunity cost of producing an additional unit raises. Economic growth Increasing resources Advancement in technology The current allocation of goods for the present matters for the future
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