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Microeconomics The first test will be on the 27th. Multiple choice and short answer. Study for recall rather than recognition. Professor advises making all study guides and notes in question-answer form. Test will cover chapters 2 through 5, plus class notes. _______________________________________________________________________________Why is the PPC Downward sloping? Because it's a tradeoff; putting more resources towards one product leads to less for the other.Why does the PPC bow outward? Because production costs as the number of goods produced increases.You are to turn prisons, hospitals, foot ball fields, and grocery stores into schools. How do you choose which one to convert first? Whichever has the lowest opportunity cost. Rephrasing of the above: You are going to watch three hours of TV. You have Netflix and can watch it whenever you like. How do you choose which hours to watch TV on the day you also have studying for economics to do? Choose the first hour that has the lowest opportunity cost (e.g. the hour you were not going to be studying anyway), the second hour by the second lowest opportunity cost, and the third by the third lowest opportunity cost.Households have a motivation in what they choose to do every day: maximizing utility.Households supply all the labor (have a big role in the production process), a huge component of buying things (70 percentage of the GDP).Firms are important because they create 100% of the goods in the market. Objective is profit. In their quest for profit, they inadvertently create jobs. The dollar value of all goods and services produced in one year is $15.5 trillion. The characteristics of firms vary. Tug of war exists between the desire for firms to decrease hiring to increase profit and households wanting to acquire jobs. Government regulates the practices of firms and interferes with the interactions between firms and households. Relatively agreed-upon things that government does: regulates natural monopolies, involves itself in the creation public goods, and the taking account of


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NU ECON 1116 - Microeconomics

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