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ECONOMICS LEARNING UNIT 1 (TEN PRINCIPLE OF ECONOMIC (Trade can make…
ECONOMICS LEARNING UNIT 1
TEN PRINCIPLE OF ECONOMIC
Trade can make everyone better off
Market is usually a good way to organize economics activity
People respond to insentive
Government can sometime improve the economics outcome
Rational people think at the margin
The cost of something is what you give up to get it
A country's standard of living depends on its ability to produce goods and services
People face trade-off
Price rise when governments prints too much money
Society faces a short-run trade-off between inflation and unemployment
ECONOMICS MODEL
The production possibilities frontier
concepts illustrated by the production possibilities frontier
trade-off
opportunity cost
efficiency
economic growth
The circular flow diagram
Household
buy and consume goods and service
own and sell factors of production
Market of goods and service
firm sell
household buy
Firm
produce goods and service
hire and use factors of production
Market of factors of production
household sell
firm buy
Production possibilities frontier
Comparative advantage
difference in the cost of production
who should produce what?
how much should be trade for each product
two ways to measure differences in cost of production
the number of hours required to produce a unit of out
the opportunity cost of sacrificing one good for another
the producer who has the smaller opportunity cost of producing good is said to have a comparative advantage in producing good
Absolute advantage
the comparison among producers of a good according to their productivity
describes the productivity of one person, firm, or nation compared to that of another
the producer that required as a smaller quantity of input to produce a goods is said to have an absolute advantage in producing good
The economist as policy a
negative statement
statement about how the world should be ( called prescriptive analysis)
positive statement
statement that attempt to describe the world as it is (called descriptive analysis)
economist in Malaysian government serve as advisers in the policy making process of the three branches of government
executive
judicial
legislative
