ECON 1000 Chapter Notes - Chapter 2: Opportunity Cost, Political Philosophy, Fiscal Policy
2 Feb 2017
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Document Summary
Devise theories, collect data, & analyze data to verify/refute theories. The role of assumptions: economists make assumptions b/c they can simplify the complex world & make it easier to understand. Economic models: usually diagrams & equations, omits some details to allow one to see the bigger picture. Our second model: the production possibilities frontier: production possibilities frontier: graph that shows the combinations of output that the economy can possibly produce given the available factors of production & the available production technology. The cost of something is what you give up to get it. Oc of x = slope of ppf: economists believe that the ppf often has this bowed shape, tradeoff can change over time. Microeconomics & macroeconomics: microeconomics: the study of how households & firms make decisions and how they interact in markets, macroeconomics: the study of economy-wide phenomena, including inflation, unemployment, & economic growth. Economists often asked to explain causes of economic events.
