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Econ 101 Lecture Note CH 1 Intro
Econ 101 Lecture Note CH 1 Intro
Chapter 1
1. Modern Economy
The economy is a system in which scarce resources are allocated among competing
uses.
physical capitals.
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Introductory Economics
Chapter 1
2. Price and Market quantity: are set in (relatively) free markets in which i
Economic Resources
To be viewed as economic resources, they must be available only for production.
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Introductory Economics
Chapter 1
The economic resources above are called factors of production, and outputs
produced using them are called goods (tangibles) or services (intangibles).
Benefits
Gained
Benefits
Forgone
Therefore, at all times, we make a choice by choosing the activity that yields the
__________ opportunity cost than that of _______ alternative activity, with a
given amount of resources available.
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Introductory Economics
Chapter 1
Suppose you have 100 kg of wheat (as a raw material). Under the current
technology and productivity, you can produce a noodle using 0.5 kg of wheat
and a loaf of bread using 0.25kg of wheat.
# of
Noodles
# of bread
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Introductory Economics
Chapter 1
Q: What does each area inside and outside the PPF represent,
respectively?
The area inside: an attainable set of current production
The area outside: an unattainable set of current production
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Introductory Economics
Chapter 1
# of
Noodles
# of bread
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Introductory Economics
Chapter 1
During the year, Wayne and Jun produce apples and peaches with constant
opportunity costs.
Wayne Jun
Apples Apples
50 45
20
15
30 50 Peaches 20 30 Peaches
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Introductory Economics
Chapter 1
Jun
Suppose both Wayne and Jun agree to trade 23 units of apples for 20 units of
peaches, called "Terms of Trade."
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Introductory Economics
Chapter 1
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Introductory Economics
Chapter 1
Positive economics is the analysis of how the world works, in which there are
definite right and wrong answers.
Identify each of the following statements as either positive (P) or normative (N)
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