I Dont Know
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CHAPTER 1 3, 4, 7, 9, 11
CHAPTER 2Homework 1, 3, 6, 9, 11
CHAPTER 3 1,4,5,7,10,12,15
February 2, 2006
Ch. 1
Economics: how to manage the scarcity of resources
Scarcity: anything that has a price must be scarce (otherwise there wont be a price; everything scarce; human nature is that we want more of everything because we dont have enough, with the exception of contentment in Christ, not enough resources to produce goods and services)
Must make choices in order to maximize your resources
Shortage: willing to pay the price but there are not enough produced
Two parts of economics (based on individual behavior “Rational Self Interest;” maximize level of satisfaction; opportunity costs not always measured in monetary form, such as going to college instead of full time college)
Microeconomics: Individual units examined
Macroeconomics: Economy as a whole
Make decisions as a whole on the margin with small increments; cost and benefit analysis; exploit opportunities to make yourself better and act on your benefit
Economy works with the interaction of individuals and the country gains by trade
Value goods differently (can specialize in one thing that you are more efficient at and can trade)
This interaction will allow the markets moving to an equilibrium (a balance, meaning that you done want to do anything different because you are “happy;” it is automatic, and it doesnt happen when the government gets involved)
Leaving the market alone means that resources will be allocated efficiency (100% efficiency in the economy means that no one is upset over their jobs and such)
Equitable Distribution goes against efficiency
Why bad markets happen to good people
Apparently need government direction at times (load of bull)
Ch. 2
Economic models: Ways of presenting complicated economic relationships (eliminates the parts of the picture you dont need)
Production Possibilities Frontier: any point within the curve is inefficient, any point outside the curve is unobtainable/unfeasible
Corn
Cars
Technology will help you to expand your production possibilities and you can produce more of both because you can task more resources to other resources, maximizing efficiency (economic growth; cars doubled in example)
Corn
Absolute advantage: better at both trades
Comparative advantage: have to give up less resources in order to have a different trade
Example: US and Japan (best way is to have 4 apples and 4 oranges in US and 2 apples and 2 oranges for the Japs)
2/9/06
Japan