chapter 2 and 3 notes
chapter 2 and 3 notes 105.0
Popular in Principles of Economics: Macro
Popular in Economcs
This 3 page Class Notes was uploaded by Sasha on Friday September 11, 2015. The Class Notes belongs to 105.0 at Pace University taught by Mark Weinstock in Fall 2015. Since its upload, it has received 121 views. For similar materials see Principles of Economics: Macro in Economcs at Pace University.
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Date Created: 09/11/15
Lab Section 09082015 KEY TERMS OPPORTUNITY COST what you sacrifice to get somethingNEXT BEST ALTERNATIVE MARIGNAL BENEFIT the extra benefit resulting from a small increase in some activity MARGINAL COST the additional cost resulting from a small increase in some activity NOMINAL VALUE the face value of an amount of money REAL VALUE is the value of money in terms of what it can buy The PPFPPC The PPF Production Possibility Frontier is an economic model It is therefore a blueprint that shows the possible combinations of products that an economy can produce given that its productive resources are fully employed and efficiently used CHAPTER 3 09102015 Objectives Explain how markets allow specialization and trade List the roles of Government in a market economy Specialization increases productivity through the division of labor in three different ways Repetition the more time a worker performs a particular task the more efficient the worker becomes at the task Continuity a specialized worker doesn t spend time switching from one task to another Innovation a specialized worker gains insights into a particular task that leads to better production methods IMPORTS A product produced in a foreign country and purchased by residents of the home country Exports a product produced in the home country and is sold to another country MARKETS Market economy an economy in which the people specialize and exchange goods and services in markets TYPES OF MARKETS Goods and services Financial markets Resources markets A number of social and government inventions have made the markets better These include 1 Contracts specify in terms of exchange facilitating exchange between strangers 2 Insurance reduces the risk entrepreneurs face 3 Patents increase the profitability of inventions encouraging firms to develop new products and production process 4 Accounting rules provide potential inventors reliable information about the financial performance of a firm Centrally planned economy an economy in which a government bureaucracy decides how much of each good to produce how to produce the good and who gets the good Market system decisions made by the millions of people who already have information about consumer s desires production technology and resources These decisions are guided by prices of inputs and outputs
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