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ECON 201 PRINCIPLES OF MICROECONOMICS

ECON 201 PRINCIPLES OF MICROECONOMICS. Chapter 1. Professor Carol Cui. Economics A discipline that studies how to allocate the scarce or limited natural resources of the world so as to best meet the unlimited wants of human beings. Microeconomics vs. Macroeconomics.

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ECON 201 PRINCIPLES OF MICROECONOMICS

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  1. ECON 201 PRINCIPLES OF MICROECONOMICS Chapter 1 Professor Carol Cui

  2. Economics A discipline that studies how to allocate the scarce or limited natural resources of the world so as to best meet the unlimitedwants of human beings. Microeconomics vs. Macroeconomics

  3. Basic economic Questions: • WHAT? • HOW? • FOR WHOM? • Answer: • Through prices determined in the market.

  4. Resources • Land: natural resources • Labor: physical & mental efforts • Capital: tools, machines, buildings, etc. • Entrepreneurship: human resources that organizes labor, land, and capital • Returns • Land  Rent • Labor  Wages • Capital Interest • Entrepreneurship Profit

  5. Normative Statements • Statements about what ought to be • e.g. The price of winter jackets should be lowered because it is now summer. • Positive Statements • Statements about what it is • Whether true or not can be checked against facts • e.g. The price of winter jackets drops when summer comes.

  6. Math Review • Positive vs. Negative Relationship • Slope of a Line vs. a Curve • Infinite vs. Zero Slope • Intercept • 45-degree line • Correlation vs. Causation

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