Scarcity

• implication
• difference from shortage

• Implies choice due to scarce resources, and that there is competition and opportunity costs
• scarcity-wants greater than resources available, shortage-quanity demanded> quantity

Production Possibility Curve

[image]

• What does it show?
• What does it mean if the line is straight?
• If it looks like above, what does it mean?
• What does the shifts mean?
• Where

• shows tradeoffs and opportunity costs
• if it is straight, opportunity cost is constant
• if concave downward, opportunity cost changes
• if production capacity increases or decreases due to newer resources or new technology, the curve will shift outward
• efficient points lay on the curve

• when a firm or country can produce a good at a lower opportunity costs than another

Specialization and Trade

• what causes it
• examples of trade organizations
• limits of trade
• consumer surplus
• producer surplus

• when a firm has a comparative advantage in a product, they specialize in it
• WTO, APEC, NAFTA
• tariffs(decrease in consumer surplus and increase in producer surplus) and quotas (same with additional revenues for importers)
• difference in price buyers pay from the maximum they would pay
• difference between price received and the minimum price a seller would take[image]

• way how society decides what, how, and for whom will be produced
• think capitalism and socialism as examples

• important as an incentive for production
• is the range of laws and regulations thT DEFINE THE RIGHTS FOR THE USE AND TRANSFER OF RESOURCES