WhizKids and members of the Flashnotes Honor Society Chapter 1 The Economic Approach 4 Learning Goals 1 Identify and list the critical components of economics Chapter heading What is Economics About Key terms Scarcity Resource Rationing What is economics How are scarcity and choice related How are scarcity and poverty different If price is not used as a rationing device what are other alternatives 2 List and provide examples of the eight guideposts of economic thinking Chapter heading The Economic Way of Thinking Key terms Opportunity cost Economizing behavior Utility Marginal Secondary effects Scientific thinking Eight guideposts 1 Example 2 Example 3 Example 4 Example 5 Example 6 Example 7 Example 8 Example 3 Distinguish between two types of economic statements Chapter heading Positive and Normative Economics Key terms Positive economics Normative economics What is the difference between positive and normative economics Provide an example of each kind of statement 4 Avoid making four common mistakes Chapter heading Pitfalls to Avoid in Economic Thinking Key terms Ceteris paribus Fallacy of composition Four common mistakes 1 2 3 4 Chapter 2 Some Tools of the Economist 6 Learning Goals 1 Define and recognize examples of opportunity costs Chapter heading What Shall We Give Up Key term Opportunity cost LeBron James would have incurred a large opportunity cost from going to college What is your opportunity cost of going to college Can opportunity costs be objectively measured Why or Why not 2 Discern why voluntary trade creates value Chapter heading Trade Creates Value Key term Transactions costs What are the two important aspects of voluntary exchange 1 2 How do transactions costs decrease the benefits of voluntary exchange 3 Realize why property rights are key to economic progress Chapter heading The Importance of Property Rights Key term Private property rights Property rights change behavior in four key ways 1 2 3 4 4 Illustrate the concepts of tradeoffs opportunity costs and growth Chapter heading Production Possibilities Curve Key terms Production Possibilities Curve Investment Entrepreneur Creative Destruction Draw a PPC with two goods you like to purchase on the axes Place point A at an inefficient point point B at an efficient point and point C at an unattainable point Four factors that could potentially shift the PPC outward 1 2 3 4 5 Recognize that specialization and division of labor lead to higher output levels and living standards Chapter headings Trade Output and Living Standards Human Ingenuity and the Creation of Wealth Addendum Key term Law of comparative advantage How is the law of comparative advantage related to specialization and division of labor In addition to specialization and division of labor how else is economic progress achieved 1 2 Is the economic pie fixed or variable Why 6 List society s three questions and specify the kinds of economic organizations Chapter heading Economic Organization Key terms Market organization Capitalism Socialism What are society s three basic questions 1 2 3 What is the key difference between market organization and collective decision making Chapter 3 Demand Supply and the Market Process 7 Learning Goals 1 Investigate and describe consumer behavior Chapter heading Consumer Choice and the Law of Demand Key terms Law of demand Substitutes When the price of a good increases why do you usually buy less of it 2 Distinguish a change in demand from a change in quantity demanded Chapter heading Changes in Demand Versus Changes in Quantity Demanded Key term Complements What is the difference between demand and quantity demanded Draw two separate demand curves For one illustrate a change in demand For the other illustrate a change in quantity demanded Factors that cause a change in demand 1 2 3 4 5 6 Identify two goods that you consider to be substitutes A and B Complete the following sentences by inserting your substitute names and circling the correct options If consumers preferences changed so that they wanted more A the demand quantity demanded for A would rise fall causing the demand curve to shift right left and they would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left If consumers preferences changed so that they wanted less A the demand quantity demanded for A would rise fall causing the demand curve to shift right left and they would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left If the price of A rose the demand quantity demanded of A would rise fall and consumers would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left If the price of A fell the demand quantity demanded of A would rise fall and consumers would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left Identify two goods that you consider to be complements A and B Complete the following sentences by inserting your complement names and circling the correct options If consumers preferences changed so that they wanted more A the demand quantity demanded for A would rise fall causing the demand curve to shift right left and they would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left If consumers preferences changed so that they wanted less A the demand quantity demanded for A would rise fall causing the demand curve to shift right left and they would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left If the price of A rose the demand quantity demanded of A would rise fall and consumers would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left If the price of A fell the demand quantity demanded of A would rise fall and consumers would purchase more less A The demand quantity demanded for B would rise fall causing the demand curve to shift right left 3 Investigate and describe firm behavior Chapter heading Producer Choice and the Law of Supply Key terms Opportunity cost of production Profit Loss Law of Supply What is the role of profits and losses in a market economy When the price of a good increases why is a firm usually willing to make more of it 4 Distinguish a change in supply from a change in quantity
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