Chapter 2 Outline Lamb
1. Economic choices
a. Steeling away
i. The steel industry has been decreasing steadily over the years
ii. Factories have been going down and workers have been losing their jobs due to the lack of need of steel
iii. Pittsburg has lost it’s importance in the steel industry
b. What are the consequences of economic choices?
i. Trade-off
1. The choice between alternative uses for a given quantity of resource
ii. Allocation
1. The different uses to which resources are put in order to produce different goods and services. The manner in which a society allocates its scarce resources determines what it produces
iii. Opportunity cost
1. Real economic cost of a good or service produced measured by the value of the sacrificed alternative
iv. Production Possibility Frontier
1. The line on a graph showing the different maximum output combinations of goods or services that can be obtained from a fixed amount of resources
v. Increasing cost
1. The rising costs that it takes to produce something and the quantity it needs to be produced at
c. What are the basic economic questions?
i. What to produce
1. The question concerning the decisions made by an economy about what (and how much of) particular goods and services to produce with its limited resources
ii. How to produce
1. The question concerning the decisions made by an economy about the technology used to produce goods and services
iii. Underemployed resources
1. Resources that are not used to their fullest potential
iv. Infrastructure
1. An economy’s stock of capital, much of it publicly owned, that provides basic services to producers and consumers. Includes such facilities as highways, electric power, water supplies, educational institutions, and health services
v. For whom to produce
1. The question concerning the decisions made by an economy about income...