January 9, 2017

Review for Quiz

What are the four factors of production? 

1. Land 
2. Labor 
3. Capital 
4. Entrepreneurship

What is the difference between Norman Opinion & Positive Economics?

• Norman-  It is the attempt to prescribe how the world should be. 
•  Positive economics-  It is the attempt to describe the world as it is. 

What is the difference between scarcity and shortage?

• Scarcity- It is the unlimited want but limited resources. 
• Shortage- It is when quantity demanded exceeds quantity supplied  

Difference between trade off and opportunity?

•  Trade off-  It is  the alternative that we sacrifice when we make a decision. 
•  Opportunity cost- It is the most desirable alternative giving up as a result of a decision. 

 How to calculate opportunity cost? 

What is the law of increasing opportunity cost?

•  As production increases the opportunity cost increases.

* know the points of the graphs*