Economic Choices

1
Economic Choices

• Chapter 2

2
What are the consequences of Economic choices?

• Trade-offs
• Opportunity costs
• TANSTAAFLs Principle
• What is sacrificed?
• Opportunity benefits

3
What are the three basic economic questions?

• What to produce?
• What and how much of particular goods and
  services to produce?

4
The Basic Economic Questions

• How to produce?
• Depends on economys resources
• Underemployed labor versus capital equipment
• Saving releases resources for investment
• Government investment in infrastructure
• Role of new technology

5
The basic economic questions

• For whom to produce.
• Concerns income distribution

6
What are societys economic goals?

• Growth
• Efficiency
• Full Employment
• Price stability

7
Societys Economic GoalGROWTH

• Increases production capacity of the economy
• Investing in growth means faster growth

8
Societys Economic GoalEFFICIENCY

• Maximizing output or minimizing resource use

9
Societys Economic GoalFULL EMPLOYMENT

• Everyone who wants a job is working

10
Production Possibilities Curve
11
Production Possibilities Curve Shifts

• Due to changes in
• Land
• Labor
• Capital
• Technology

12
Societys Economic GoalPRICE STABILITY

• Relatively constant level of prices for goods and
  services

13
Socioeconomic Goals

• Social goals that can affect the economy