-What goods and services are produced and in what quantities?
Depends on price, necessity, availability, resources, substitutes
-How are goods and services produced?
Depends on how efficient youwant to be, how many jobs you want to provide to the economy, how special your product is and how much production you want to have.
-When are goods and services produced?
Depends on recessions,surpluses, and overall demand.
-Where are goods and services produced?
Depends on cheap labor, low taxes, and overall lower costs
-Who consumes the goods and services that are produced?
Dependson the income that people earn.
1. choice, tradeoff, and opportunity cost
* A choice is a tradeoff, we give up something to get something else.
* The highest-value alternative we give upis the opportunity cost of the activity we choose.
* Opportunity Cost is: The highest valued alternative forgone when you choose one thing over another.
* The term opportunity cost is used ineconomics to emphasize that when we make a choice in the face of scarcity, we give up an opportunity to do something else.
2.Margins and incentives
* We make choices in small steps and ourchoices are influenced by incentives.
* When we compare a decision cost with its benefits we are deciding AT THE MARGIN.
* What is an incentive? An inducement to take a particular action.3.Voluntary exchange
Voluntary exchange makes both, buyers and sellers happy.
Can you explain why?
Because in a voluntary exchange market we exchange some or our resources (money or labor) for thebenefits that they can give us.
4. The market fails
* The market almost never does a good job!!!! Some examples:
* Credit cards interest rates too high
* Wages of labor workers too low
*Prices of items go up ( Buyers , sellers )
* Prices of items go down (buyers , sellers )
* Price of oil going up due to political instability in the middle east.
These are just reminders of...
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