Econ Chapter 1 Lesson 3 (Book Notes) verified questions and solution A+ grade
Economic Decision - -The first thing we must recognize is that people face trade-offs or
alternate choices whenever they make this.
Decision making grid - -Using this is one way to analyze an economic problem.
Making a grid - -Forces you to consider a number of relevant alternatives and it requires
you to identify the critera used to evaluate the alternated and it forces you to evaluate each
alternate based on the critera you selected.
People often think - -of cost in terms of dollars and cents.
Economists often think - -of cost often means more than the price tag placed on a good
or service.
Economics think broadly in opportunity cost - -The cost of the next best alternative use of
money, time, or resources when one choice is made rather than another.
Even Time - -Has an opportunity cost, although you cannot always put a monetary value
on it.
Part of making economic decisions - -Involves recongnizing and evaluating the cost of the
alternates as well as making choices from amoung the alternatives.
Production possibilities frontier - -Popular model economists use to illustrate the concept
of opportunity cost is this and a diagram representing various combinations of goods and/or
services an economy can produce when all production resources are fully employed.
, Guns and butter - -Alpha produces only these two kinds goods.
Shifting - -of its resources out of gun production and into butter and vise versa.
Alpha has many alternatives - -Available to it which is why the figure is called a
production possibilities frontier.
Maximum combinations - -Of output possible if all resources are fully employed.
Production possibilities frontier - -The figure is called this to indicate the maximum
combinations of goods and/or services that can be produced.
Opportunity cost - -Is a general concept that is expressed in terms of trade-offs or in
terms of things given up to get something else.
Opportunity cost is not - -Always measured in terms of dollars and cents Ex: You need to
balance the time you spend studying and doing homework and spending time with your friends
you decide to spend extra hours on you homework the opportunity cost is action of less time
with friends.
As long as some resources are idle - -Then the country cannot produce on its frontiers
with another way of saying that it cannot reach its full production potential, although it can
produce at some point inside it.
Production possibilities frontier - -Represents potential output at a given point in time.
Economic Decision - -The first thing we must recognize is that people face trade-offs or
alternate choices whenever they make this.
Decision making grid - -Using this is one way to analyze an economic problem.
Making a grid - -Forces you to consider a number of relevant alternatives and it requires
you to identify the critera used to evaluate the alternated and it forces you to evaluate each
alternate based on the critera you selected.
People often think - -of cost in terms of dollars and cents.
Economists often think - -of cost often means more than the price tag placed on a good
or service.
Economics think broadly in opportunity cost - -The cost of the next best alternative use of
money, time, or resources when one choice is made rather than another.
Even Time - -Has an opportunity cost, although you cannot always put a monetary value
on it.
Part of making economic decisions - -Involves recongnizing and evaluating the cost of the
alternates as well as making choices from amoung the alternatives.
Production possibilities frontier - -Popular model economists use to illustrate the concept
of opportunity cost is this and a diagram representing various combinations of goods and/or
services an economy can produce when all production resources are fully employed.
, Guns and butter - -Alpha produces only these two kinds goods.
Shifting - -of its resources out of gun production and into butter and vise versa.
Alpha has many alternatives - -Available to it which is why the figure is called a
production possibilities frontier.
Maximum combinations - -Of output possible if all resources are fully employed.
Production possibilities frontier - -The figure is called this to indicate the maximum
combinations of goods and/or services that can be produced.
Opportunity cost - -Is a general concept that is expressed in terms of trade-offs or in
terms of things given up to get something else.
Opportunity cost is not - -Always measured in terms of dollars and cents Ex: You need to
balance the time you spend studying and doing homework and spending time with your friends
you decide to spend extra hours on you homework the opportunity cost is action of less time
with friends.
As long as some resources are idle - -Then the country cannot produce on its frontiers
with another way of saying that it cannot reach its full production potential, although it can
produce at some point inside it.
Production possibilities frontier - -Represents potential output at a given point in time.
