Macroeconomics unit 1 study guide basic economic concepts

Capital - all manufactured aids to production tools, machinery, equipment, and factory, storage, transportation, and distribution facilities used in producing goods and services. Labor - physical and mental talents of individuals available and usable in producing goods and services. Entrepreneurial ability - the entrepreneur 1 takes the initiative in combining the other resources to produce a good or service. Production Possibilities Curve.

Scarcity is the basic problem in economics in which society does not have enough resources to produce whatever everyone needs and wants. Basically, it is unlimited wants and needs vs. Scarcity is faced by all societies and economic systems. Since we are faced with scarcity , we must make choices about how to allocate and use scarce resources. Economics is the study of how individuals, firms, and governments deal with scarcity.

Macroeconomics unit 1 study guide basic economic concepts

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Per unit opportunity cost is determined by dividing what you are giving up by what you are gaining. The production possibilities curve represents the combinations of maximum output that can be reached in the economy.

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All Subjects. AP Microeconomics. Unit 1 — Basic Economic Concepts. Unit 1: Basic Economic Concepts. Scarcity is the basic problem in economics in which society does not have enough resources to produce whatever everyone needs and wants. Basically, it is unlimited wants and needs vs. Scarcity is faced by all societies and economic systems. Since we are faced with scarcity , we must make choices about how to allocate and use scarce resources.

Macroeconomics unit 1 study guide basic economic concepts

All Subjects. AP Macroeconomics. Unit 1 — Basic Economic Concepts. Unit 1 Overview: Basic Economic concepts. To start your study of Economics it is important to understand what the Economic system is about. In this course, Economics is understood as the systematic study of choice.

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Economics is the study of how individuals, firms, and governments deal with scarcity. Usually, the curve is some type of consumer goods versus some type of capital goods. Factors of production Several objectives must be satisfied to reach full production: 1 Full employment - use all available resources 2 Full production - use resources efficiently productive efficiency - production in least costly way, allocative efficiency - production of goods and services most wanted by society Production Possibilities Curve The production possibilities curve represents the combinations of maximum output that can be reached in the economy. When they move from combo A to combo B, they give up 6 million trucks, which is their opportunity cost for this decision. My Dashboard. What goods and services will be produced? Opportunity Cost — this is the value of the next best alternative when making a choice. This type of economic system can also take on the disadvantages of other types of economies so it depends on which characteristics it emphasizes. To determine absolute advantage , you are looking for the country that uses the least amount of resources i. The cheeseburger is your opportunity cost for choosing pizza because it is the next best alternative if your first choice is unavailable.

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Economic growth - produce more and better goods and services 2. Input problems focus on how much of a resource is needed to produce one unit of a particular good or service. Some examples of command economies are North Korea and Cuba. Economic contraction is shown by a leftward shift of the production possibilities curve. Since 8 is greater than 6, this is the best choice. Usually, the curve is some type of consumer goods versus some type of capital goods. One must compare marginal benefits and marginal costs to determine the best or optimal output mix on the Production Possibilities Curve. My certificates. If they were producing at combo B and moved to combo A, their opportunity cost would be 8 million cars. Point G represents a production level that is unattainable. Macroeconomics Microeconomics is the study of how individuals, households, and firms make decisions and allocate resources. The table below shows the per-unit prices and marginal utility for the last unit of popcorn buckets and large sodas that Donna purchased. If you are given total utility TU , you must first calculate marginal utility MU. Several objectives must be satisfied to reach full production: 1 Full employment - use all available resources 2 Full production - use resources efficiently productive efficiency - production in least costly way, allocative efficiency - production of goods and services most wanted by society.