Econ Ch 1-4

if the rules (laws) are clear and stable (predictable), then individuals can make economic adjustments

efficiently allocate  scarce resources by comparing expected benefits to expected costs

the study of how individuals allocate scarce resources among unlimited wants and desires within a set of rules

goods for which we are willing to sacrifice something to get, makes economizing necessary

what we must give up in order to have a good.  Not everyone will have the same ___.  The cost of obtaining anything is the value placed on whatever must be sacrificed in order to obtain it.

what ever people value, e.g.,  money, time

Price is a means of allocating scarce goods.
(Lottery, first-come-first-served, equally, merit, might-is-right)

"Wealth of Nations" (in 1776), “invisible hand” works without government planning, he observed the free market

“Principles of Political Economy and Taxation” (in 1817). Law of comparative advantage and argued that free trade benefited all.  

making available more scarce resouces that consumers desire, an alternative to production, trade-offs

is determined by the opportunity cost, opens the possibility of trade, whoever gives up less in an exchange has the...

“Communist Manifesto” (in 1848)  Also observed that
specialization of labor leads to capitalism and trade, but thought that the flaws in society would ultimately cause that system to collapse.

4 Men identified with the _____ school of thought suggesting (late 1880’s to early 1900’s) economics is the study of the intentional human actions (less about math) of individuals, believed the market should pull away from gov't regulation, human action not numbers.

whoever can produce more in a given period has the...

an increase in wealth, the benefit outweighs the cost

additional benefits outweigh additional cost

illustration of the maximum combination of producation using a given set of resources and talent

occurs when a producer believes they have a comparative advantage on a product, only producing that one

the cost of finding the buyer/seller to trade with

the knowledge necessary to actively and wisely engage in the trade

these help reduce transaction and information costs

the amount that buyers are willing and able to purchase at a given price

the inverse relationship between price and the quantity  demanded at each price, everything else equal.

a measure of the responsiveness of demand or supply

the responsiveness to changes in price

the amount that sellers are willing and able to sell at a given price

the direct relationship between price and the quantity supplied at each price, everything else equal.

past expenses that are not relevent, do not matter to our current decision making

costs that vary with level of production (ex. produce more, higher cost)