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## I. UNIT I

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1. I. UNIT I A. The Nature and Methods of Economics and the Economizing Problem 1. Scarcity 2. Opportunity Cost 3. The inevitability and consequences of resource scarcity 4. Three of the economic goals amplified a. Efficiency 1. Allocative efficiency 2. Technical efficiency b. Equitable distribution of income

2. Allocative Efficiency -----producing that combination of goods and services ................which maximizes society's satisfaction. ................which society prefers. Society cannot minimize costs without both kinds of efficiency. What does this kind of efficiency have to do with cost?

3. Wheat crumbies/year Rice Krispees/year Tons Tons 0 4 1 3 2 2 3 1 4 0

4. Wheat crumbies/year Rice Krispees/year Tons Tons 0 4 4 0

5. MORE PREFERRED LESS PREFERRED Wheat crumbies/year Rice Krispees/year Tons Tons 0 4 4 0

6. Option A Option B Watch football Visit sick friend in game on TV hospital home

7. Option A Option B Watch football Visit sick friend in game on TV hospital home Cost of = Value placed on

8. Option A Option B Watch football Visit sick friend in game on TV hospital home Cost of = Value placed on Value placed = Cost of on

9. Option A Option B Pay taxes Don't pay taxes

10. Option A Option B Pay taxes: Don't pay taxes stay out of jail

11. Option A Option B Pay taxes: Don't pay taxes stay out of jail Go to work Don't go to work

12. Option A Option B Pay taxes: Don't pay taxes Stay out of jail Go to work: Don't go to work be able to eat, stay warm, etc.

13. Option A Option B Go straight Veer right-- pick off Rouch

14. Option A Option B Go straight Veer right-- pick off Rouch Cost to you of B (assuming no laws) is value you place on A

15. Option A Option B Go straight Veer right-- pick off Rouch Cost to you of B (assuming no laws) is value you place on A Cost to society of B is value you place on A + value I place on you choosing A + value my wife places on you choosing A, etc.

16. Option A Option B Go straight: Veer right-- pick stay out of off Rouch jail