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(TEN PRINCIPLES OF ECONOMICS (:pencil2:4: People Respond to Incentives, …
TEN PRINCIPLES OF ECONOMICS
:pencil2:6: Markets Are Usually a Good Way to Organize Economic Activity
:pencil2:7: Governments Can Sometimes Improve Market Outcomes
:pencil2:8: A Country’s Standard of Living Depends on Its Ability to Produce Goods and Services
:pencil2:4: People Respond to Incentives
:pencil2:9: Prices Rise When the Government Prints Too Much Money
:pencil2:3: Rational People Think at the Margin
:pencil2:10: Society Faces a Short-run Trade-off between Inflation and Unemployment
:pencil2:2: The Cost of Something Is What You Give Up to Get It
OPPORTUNITY COST
OR
OPPORTUNITY COST
OR
:pencil2:1: People Face Trade-offs
VS
:pencil2:5: Trade Can Make Everyone Better Off
POSITIVE STATEMENT
-descriptive analysis
NEGATIVE STATEMENT
-prescriptive analysis
OPPORTUNITY COST
-what must be given up to obtain some item
COMPARATIVE ADVANTAGE
-producer who has the smaller opportunity cost of producing a good
ABSOLUTE ADVANTAGE
-producer that requires a smaller quantity of inputs to produce a good
ASSUMPTION
the art in scientific thinking
different assumptions to answer different questions
to make the world easier to understand
ECONOMICS MODEL
THE CIRCULAR FLOW DIAGRAM
THE PRODUCTION POSSIBILITIES FRONTIER
