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Week 1 Eco 732

In: Business and Management

Submitted By miguel911
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Basic Definitions
Miguel Gonzalez
ECO/372
February 11, 2013
Mr. Laurence Hagan

Basic Definitions
Economics: “The study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society.” (Colander) Economics is the complex study of maintaining financial stability. It is divided into two main categories, macroeconomics and microeconomics. Macroeconomics is the action of moving finances between individuals. Microeconomics views the bigger picture by analyzing the international marketplace.
Scarcity: “The goods available are too few to satisfy individuals’ desires.” (Colander) Scarcity occurs when demand is not met due to limited resources or insufficient productivity.
TANSTAAFL: “There ain’t no such thing as a free lunch”. (Colander) A societal term, TANSTAAFL, occurs under economic efficiency. Obtain a free lunch, but eventually the lunch is paid for at the price of expensive drinks.
Opportunity cost: “Opportunity cost is the basis of cost/benefit economic reasoning; it is the benefit that you might have gained from choosing the next-best alternative.” (Colander) A couple choses not have children and instead choses to finance their new home and early retirement. The resources will be used either way but the benefits differ.
Production Possibilities Curve: “achieving as much output as possible from a given amount of inputs or resources.” (Colander) The curve allows individuals to move points that represent the outcome of efficiency. Within the curve, move the point to illustrate if the resources are producing maximum outcome.
Comparative advantage is “the ability to be better suited to the production of one good than to the production of another good.” (Colander) When the company produces at the lowest resource cost; they have a comparative advantage. They sell…...

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