Summary of Chapter 1. Everything you need to know in order to answer and pass all Chapter 1 related questions in the exam. Including post hoc fallacy, opportunity cost, factors of production, ceteris paribus etc.
• It is the study of how people, organisations, and businesses make social decisions to
maximise their degree of enjoyment in times of shortage.
• A punishment or a reward could be used as an incentive.
• The primary source of economic issues is scarcity.
• The best way to describe economics is as the study of how individuals, organisations,
governments, and societies come to decisions about scarcity.
• Economists note that both the wealthy and the impoverished must deal with scarcity.
• Economics is the study of the decisions we make in response to scarcity.
• Scarcity is a notion that pertains to both money and time.
• People must make decisions because of scarcity.
Examples of microeconomics.
• The causes of the average price increase
• The individual consumer's purchasing decisions.
• Researching how prices are set in specific markets.
• An examination of how various decision-making units behave.
• The effect rent caps have on the availability of units.
• How a higher cigarette tax affects the sale of cigarettes.
• The choices a company makes regarding recruiting.
The difference between microeconomics and macroeconomics
• Macroeconomics examines the decisions made by businesses and individuals, while
microeconomics focuses on the overall state of the national economy.
Examples of macroeconomics.
• The impact of federal budget deficits on interest rates. how raising the money supply
• affects inflation.
• Total employment across the country.
Examples of answering economic questions
• An economy responds to the "what" question when it creates more homes and fewer
typewriters.
• Businesses in an economy are responding to the "what" issue when they begin
manufacturing more computers and fewer televisions.
• As petrol prices climb, American automakers choose to create more compact cars and
fewer SUVs. Producers respond to the "what" query.
• An example of a "what" question is "Should movies or compact discs be produced?"
• More services than goods are produced in the US.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller filocypher95. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.52. You're not tied to anything after your purchase.
