Chapter 1 What Is Economics

Economics: Principles in Action C H A P T E R 1 What Is Economics?

Section 1 – Scarcity and the Factors of Production

What Is Economics? ,[object Object],[object Object],[object Object],[object Object]

Scarcity and Shortages ,[object Object],[object Object]

The Factors of Production ,[object Object],[object Object],[object Object]

The Factors of Popcorn Production

Section 1 Review Questions ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

Section 2 – Opportunity Cost

Trade-offs and Opportunity Cost ,[object Object],The most desirable alternative given up as a result of a decision is known as opportunity cost . Trade-offs are all the alternatives that we give up whenever we choose one course of action over others.

The Decision-Making Grid ,[object Object],Karen’s Decision-making Grid Alternatives Sleep late Wake up early to study Benefits ,[object Object],[object Object],[object Object],[object Object],[object Object],Decision Sleep late Wake up early to study for test Opportunity cost Extra study time Extra sleep time Benefits forgone ,[object Object],[object Object],[object Object],[object Object],[object Object]

Thinking at the Margin ,[object Object]

Section 3 – Production Possibilities Graph

[object Object],[object Object],Production Possibilities Watermelons (millions of tons) Shoes (millions of pairs) Shoes (millions of pairs) 25 20 15 10 5 0 25 20 15 10 5 Production Possibilities Graph Watermelons (millions of tons) 0 a (0,15) 15 8 14 b (8,14) 14 18 20 21 12 9 5 0 A production possibilities frontier c (14,12) d (18,9) e (20,5) f (21,0)

Efficiency ,[object Object],Shoes (millions of pairs) 25 20 15 10 5 0 25 20 15 10 5 Watermelons (millions of tons) Production Possibilities Graph g (5,8) A point of underutilization c (14,12) d (18,9) e (20,5) f (21,0) a (0,15) b (8,14) S

Growth ,[object Object],Shoes (millions of pairs) 25 20 15 10 5 0 25 20 15 10 5 Watermelons (millions of tons) Production Possibilities Graph T Future production Possibilities frontier c (14,12) d (18,9) e (20,5) f (21,0) a (0,15) b (8,14) S

Cost ,[object Object],Watermelons (millions of tons) Shoes (millions of pairs) Shoes (millions of pairs) 25 20 15 10 5 0 25 20 15 10 5 Production Possibilities Graph Watermelons (millions of tons) 14 18 20 21 12 9 5 0 0 15 8 14 c (14,12) d (18,9)

Chapter 1 What Is Economics

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Chapter 1 What Is Economics