lecture the Key Principles of Economics培训讲义.pptVIP

Key Terms factors of production marginal benefit marginal cost nominal value production possibilities curve real value absolute advantage comparative advantage consumption possibilities curve * * Lecture 3: The Key Principlesof Economics What Is Economics do? Economics is the study of the choices made by people who are faced with scarcity. Scarcity is a situation in which resources are limited and can be used in different ways, so one good or service must be sacrificed for another. The Economic Problem: Scarcity And Choice ? FIGURE 2.1 The Three Basic Questions Every society has some system or process that transforms its scarce resources into useful goods and services. The primary resources that must be allocated are land, labor, and capital. The Economic Problem: Scarcity And Choice capital Things that are produced and then used in the production of other goods and services. factors of production (or factors) The inputs into the process of production. Another term for resources. production The process that transforms scarce resources into useful goods and services. inputs or resources Anything provided by nature or previous generations that can be used directly or indirectly to satisfy human wants. The Principle of Opportunity Cost PRINCIPLE of Opportunity CostThe opportunity cost of something is what you sacrifice to get it. Most decisions involve several alternatives. The principle of opportunity cost incorporates the notion of scarcity. “There is no such thing as a free lunch.” example When you bought a house, you have 2 different economic choices: used exclusively for living, give up profits from rent, that is, living as well as losing profit for rental opportunities; the other hand, if you rent, you should not be able to live in the house at the same time. The growth of the frozen dinner entrée market in the last 50 years is a good example of the role of opportunity costs in our lives. Opportunity Cost Frozen Foods andOpportunity Costs P