Please enable JavaScript.
Coggle requires JavaScript to display documents.
Lu1: Introduction (10 Principles of economic (Principles 5: Trade can make…
Lu1: Introduction
10 Principles of economic
Principles 5: Trade can make everyone better off
Principles 6: Markets are usually a good way to organize economis activity
Principles 4: People respond to incentives
Principles 7: Governments can sometimes improve market outcomes.
Principles 3: Rational people think at the margin
Principles 8: A country's standard of living depends on its ability to produce goods and services
Principles 2: The cost of something is what you give up to get it
Principles 9: Prices rise when the government prints to much money
Principles 1: People face trade-offs
Principles 10: Society faces a short-run trade-off berween inflation and unemployment
Economic models
The Production Possibilities Frontier
The Circular Flow Diagram
Positive versus Normative Analysis
Positive statements (descriptive analysis) :
to descride the world as it is
Normative statement (prescriptive analysis): how the world should be
Comparative Advantages
The number of hours required to produce a unit of output
The opportunity cost of sacrificing one good for another
Absolute Advantages (comparison)
describes the productivity of one person, firm
or nation compared to that of another
the producer that requires a smaller quantity of inputs to produce a good is said to have an absolute advantage in producing that good