Define Economics and the Features of the Economic Perspective

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AFTER READING THIS CHAPTER, YOU SHOULD BE ABLE TO: 1 Define economics and the features of the economic perspective. 2 Describe the role of economic theory in economics. 3 Distinguish microeconomics from macroeconomics and positive economics from normative economics. 4 List the categories of scarce resources and delineate the nature of the economizing problem. 5 Apply production possibilities analysis, increasing opportunity costs, and economic growth. 6 Explain how economic growth and international trade increase consumption possibilities. 7 (Appendix) Understand graphs, curves, and slopes as they relate to economics. 1 Limits, Alternatives, and Choices (An appendix on understanding graphs follows this chapter. If you need a quick review of this mathematical tool, you might benefit by reading the appendix first.) People’s wants are numerous and varied. Biologically, people need only air, water, food, clothing, and shelter. But in modern societies people also desire goods and services that provide a more comfortable or affluent standard of living. We want bottled water, soft drinks, and fruit juices, not just water from the creek. We want salads, burgers, and pizzas, not just berries and nuts. We want jeans, suits, and coats, not just woven reeds. We want apartments, condominiums, or houses, not just mud huts. And, as the saying goes, “That is not the half of it.” We also want flat-panel TVs, Internet service, education, homeland security, cell phones, health care, and much more. Fortunately, society possesses productive resources, such as labor and managerial talent, tools and machinery, and land and mineral deposits. These resources, employed in the economic system (or simply the economy), help us produce goods and services that satisfy many of our economic 3 ORIGIN OF THE IDEA O 1.1 Origin of the term “Economics” wants. But the blunt reality is that

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