Chapter 1A shift of the curve will occur to the left with a decrease in demand, and will shift to the right with an increase in income.Chapter 1Scarcity-Fundamental Concept of economics that indicates that there is less of a good freely available from nature than people would like.Resource- An input used to produce economic goods, land, labor, skills, natural resources, and human made tools are examples. Capital- Human made resources (such as tools, equipment and structures) used to produce other goods and services.Objective- a fact based on observable phenomena that is not influenced by differences in personal opinion.Subjective-An opinion based on personal preferences and valued judgments.Economic Behavior- Choosing the option that offers the greatest benefit at the least possiblecost.Utility-The subjective benefit of satisfaction a person expects rom from a choice or course ofaction.Chapter 2Transaction Cost – The time effort and other resources needed to search out, negotiate, and complete on exchange.*** Production possibility CurveThe Curve can be shifted by:- Investment- Technological Advances- Improved Institutions- Greater Work EffortsCreative Destruction: The replacement of old production methods by innovated newones that consumers judge to be superior. Key Points1. The highest valued activity sacrificed when a choice is made is known as opportunity cost/ explains human behaviors.2. Mutual Gain is the foundation of trade3. Transaction Cost – Middle Men reduce the costs. Chapter 3Law of Demand-A principle that states there is an inverse relationship between the price of a good and the quantity of it buyers are willing to purchase As the price of a good goes up, Consumer purchases will go down. Law of DemandA shift of the curve will occur to the left with a decrease in demand, and will shift to the right with an increase in
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