Macroeconomics Chapter #2
Macroeconomics Chapter #2 eco 105
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This 1 page Class Notes was uploaded by Daniel Hong on Thursday October 1, 2015. The Class Notes belongs to eco 105 at Pace University taught by Mark Weinstock in Fall 2015. Since its upload, it has received 38 views. For similar materials see Principles of Economics: Macroeconomics in Economcs at Pace University.
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Date Created: 10/01/15
Chapter 2 The Key Principles of Economics Opportunity Cost something that you sacrifice to get 0 I sacrifice an hour of my sleep in order to get one more hour to study 0 The best alternative 0 What are you giving up to do something Opportunity Cost and the Production Possibilities Curve A curve that shows the possible combinations of products that an economy can produce It illustrates the principle of opportunity cost for an entire economy 0 Being on the curve line is the best option 0 The closer the better There can also be a shift in the curve 0 Price Change shift in the curve The Marginal Principle Marginal Benefit the additional benefit resulting from a small increase in some activity Marginal Cost the additional cost resulting from a small increase in some activity 0 The marginal benefit should always be better than the marginal cost Voluntary Exchange a voluntary exchange between two people that makes both people better off Diminishing Returns adding one more input would increase production but at a slower pace 0 Because you would need to share the product Real Nominal Principle Nominal Value the face value of an amount of money Real Value the value of an amount of money in terms of what it can buy
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