LEARNING UNIT 1: INTRODUCTION (10 Principles of Economics (How People Make…
LEARNING UNIT 1: INTRODUCTION
10 Principles of Economics
How People Interact
Trade can make everyone better off. : :<3:
Markets are usually a good way to organize economic activity. :<3:
Governments can sometimes improve economic outcomes. : :<3:
How economy As a Whole Works
A country's standard of living depends on its ability to produce goods and services. :red_flag:
Prices rise when the government prints to much money. :red_flag:
Society faces a short-run trade-off between inflation and unemployment.
How People Make decision
People face trade-offs. :pencil2:
The cost of something is what you give up to get it. :pencil2:
Rational people think at the margin. :pencil2:
People respond to incentive. :pencil2:
Two Most Basic Economic Model
The production Possibilities Frontier
:check: It shows the combination of output that the economy can possibly produce the available factor and available production technology.
The Circular Flow
:check: Visual modal
:check: It show how dollar flow among household and firm.
Two ways to measure differences in costs production:
:green_cross: The number of hour to produce a unit of output.
:green_cross: Example: one pound of potatoes
:green_cross: The opportunity cost of sacrificing one good for another.
Comparison among producers of a good according to their productivity
:star: Describes the productivity of one person, firm or nation compared to that of another.
:star: The producer requires smaller quantity of input to produce a good is said to have an absolute advantage in producing that good.
OPPORTUNITY COST AND COMPARATIVE ADVANTAGE
:explode: Compares producer of a good according to their
that is what must be given up to obtain some item.
:explode: The producer who has the smaller opportunity cost of producing a good is said to have a
in producing that good.