* Four primary contributors: - ANS-1. Domestic family
2. Domestic enterprise
3. The government
four. Foreigners
** Explicit: - ANS-Transaction (cash exchange)
** Implicit: - ANS-Business Analysis (Raul -->time additionally) What the enterprise own. Raul
with all of his medical machines.
*Circular Flow Model: - ANS-first model, fundamental model represents the 4 simple members
*The production possibilities curve - ANS-A production possibilites curve (frontier) reflects all
mixtures of two goods that can be produced deliver the availability of and exceptional of assets
and given the extent of era.
1. Understanding Opportunity Cost: - ANS--No such aspect as FREE
- The possibility fee of a aspect is the very best valued forgone "possibility"
-Buying a soda: dollars could be somewhere else. Time spent someplace else.
*Any price is an possibility value
-What you deliver to up to get some thing
-ex. Going to get ice cream, however having to go get gasoline. ( three human beings going to
get gasoline)
**** Explicit and Implicit
2. Recognizing that human beings Economize: - ANS-To save money menas to get the most for
the least
-ex. Get the maximum for the least
-Most satisfaction for the least cost
three. Remember that human beings respond to incentives: - ANS-The fundamental populate of
economics is that people respond to incentives.
Ex. Solutions or guidelines to a check
4 Basic businesses of Resources - ANS-1. Land
2. Labor
3. Capital
four. Entrepreneurial Abilities
four Themes of Economics - ANS--Definition of Economics
-Definition of supply
- Definition of Demand
-Mutually Beneficial Voluntary Exchange (if the alternate is voluntary each events advantage.)
four. Realize that decisions are made on the "margin" - ANS-in economics, marginal approach
incremental or change- in or additional
-reflect onconsideration on the next increment
ex. Going to magnificence
ex. Hamburger and fries without or with milkshake
, correct or horrific effect
-Utility --> delight
-Marginal application --> increased pride
5. Realize that records and time - ANS-understand that information and time are important in
making alternatives but both are expensive
6. Recognize that most moves - ANS-Recognize that maximum actions generate poor
secondary consequences.
-The failure to remember secondary consequences is the maximum common supply of
economic mistakes.
-Secondary results are frequently thought of as "unintentional consequences
-intentions aren't effects
*Don Raux: decide a policy through incentives "Intentions aren't consequences"
7. The price - ANS-The value of a thing is always completely subjective
ex. What's the fee of a fresh tomato?
8. The real check of any idea - ANS-is is's capacity to predict law of call for: easy perception of if
a fee is going up much less can be offered.
A shift inside the Production Possibilities Frontier - ANS-A technological enhance in the
computer industry permits the economy to supply more computer systems for any given quantity
of vehicles. As a result, the manufacturing opportunities frontier shifts outward. If the economic
system actions from point A to factor G, then the manufacturing of both cars and computer
systems increases.
Absolute benefit - ANS-the ability to provide true using fewer inputs than some other
manufacturer.
Adam Smith argued: - ANS-That a BASIS FOR TRADE stemmed from the existence of COST
DIFFERENCES BETWEEN NATIONS.
-Trade between nations is based totally on the belief of absolute gain
All mixtures ON a production possibilities curve constitute - ANS-1. FULL employment of
available resources
2. FULL usage of current era
Alll combinations INSEIDE a PPC constitute - ANS-1. Unemployment
2.Underemployment
three. Underutilization of existing era
4. Some aggregate of all 3
Autarky: - ANS-No alternate
Capital Resource - ANS-guy made assets utilized in generating matters.
-Physical Capital: " "
-Human Capital: The recognise-How: college to make yourself greater marketable (information)
Circular Flow Diagram: - ANS-a visual version of the economy that suggests how greenbacks
glide thru markets among families and corporations.
Common Mistakes in Economic Analysis - ANS-1. The fallacy that affiliation is causation
2. The fallacy of composition
three. The mistake of ignoring secondary consequences
4. Violation of the Ceteris Paribus (All else steady) condition
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