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Economics
Study of how individuals + societies choose to use the scarce resources that nature and previous generations have provided
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Microeconomics
Examines the functioning of individual industries and the behavior of individual decision making units- that is, firms + households.
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Macroeconomics
examines eco behavior of aggregates- income, employment, output, and so on- on a national scale
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opportunity cost
best alternative that we forgo, or give up, when we make a choice or decision.
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descriptive economics
compilation of data that describe phenomenom and facts
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Normative economics
analyzes outcomes of economic behavior, evaluates them as good or bad, and may prescribe courses of action.
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ceteris paribus, or all else equal
device used to analyze the relationship between two variables while the value of other variables are held unchanged
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capital
things that are produed and then used in the production of other goods and services
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theory of comparative advantage
ricardos theory that specialization and free trade will benifet all tradng parties, even those that may be "absolutely" more efficient producers
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comparative advantage
producer can produce product at a lower opportunity cost
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production possibility frontier (PPF)
A graph that shows all the combonations of goods and services that can be produced if all of societies resources are used efficiently
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command economy
central government either directly or indirectly sets output targets, incomes, and prices
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laissez-faire economy
individual peole and firms pursue their own self-interst without any central direction or regulation
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circular flow
- supply--->demand ON THE INSIDE
- Payment ON THE OUTSIDE
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LOD
af price falls, quantity demanded rises
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