Microeconomics Comprehension Paper

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Microeconomics Comprehension Paper I. Describe and understand the basic terminology of economics 1. What is scarcity and how does it affect economies? Scarcity is when you are wanting something more than what you have access too. Right now I have 3 classes with tests this week and a state exam for my new job so I want a lot more time than I have, but I cannot change that fact there is only so much time in a day. So when it comes to time and all the tasks that I have to do, something must be sacrificed in order to get some sleep and try to touch on all subjects that I have going right now. If someone could start manufacturing time slows or something, then I would be in luck. 2. What is the marginal principle? How does this relate to comparing costs to benefits? This is the relation from cost to the benefits on a …show more content…

The inferior goods become more elastic as income increases and for superior goods become more elastic as income decreases. II. Demonstrate Knowledge of the concept of opportunity cost 1. What is an opportunity cost? Opportunity cost is the cost of someone doing something but at the cost of what else they had to give up. Let’s say that someone wanted to go to Chili’s to eat but their friends wanted to go to Saltgrass, the price difference from Chili’s to Saltgrass is their opportunity cost because they could have gone there instead and gotten food they wanted more and spent less money. 2. What is the production possibilities frontier and what is it used for? The production possibilities frontier(PPE) is a curve on the graph that shows all the possibilities on the graph that the market can have. The points along the graph are considered to be obtainable and at markets best. Plots inside the graph are considered obtainable for a market but not at the markets best. The plots outside the graph are considered not obtainable and are over the markets best output, however, this is obtainable by trade

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