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Notes

[Diapositiva 1] ECO 201: Principles of Microeconomics Study Guide for Exam 1 Professor Dora Gicheva [Diapositiva 2] Some Important Concepts Types of graphs (scatter diagram, time series graph, cross-section graph) Positive vs. Normative analysis Scarcity Opportunity cost The value of the next best thing that you must give up to get something Includes but not limited to monetary cost [Diapositiva 3] Circular Flow Model Decision-making units Households Firms Factors of production/ inputs Land Labor Capital Entrepreneurship Markets Goods & services Factors of production [Diapositiva 4] Households Buy and consume goods and services Own and sell factors of production Markets for goods and services Firms sell Households buy Firms Produce and sell goods and services Hire and use factors of production Markets for factors of production Households sell Firms buy Wages, rent, interest, profit Labor, land, capital, entrepreneurship Goods and services Goods and services Wages, rent, interest, profit Labor, land, capital, entrepreneurship [Diapositiva 5] Production Possibilities Frontier (PPF) Salads Pizza pies A B C D E [Diapositiva 6] Production Possibilities Frontier (PPF) Law of Increas...