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Cards In This Set
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Economics
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Study of allocating or distributing scarce (limited) resources amoung people unlimited wants
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3 Resources
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1.) Land -----> Rent
2.) Labor----> Wages + salary
3.) Capital-----return of owning capital is interest
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Self interest theory
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Means individuals will consume the goods and sevices that give them a return (satisfaction).
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2 Types of economic Thinking or inquiry; 2 ways to view the economy
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1.) Normative Analysis
2.) positive analysis
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Theory
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A set of abstractions ( set of ideas) about the real world ( positive analysis) in order to solve a problem.
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2 common mistakes that can occur when using theories
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1.) Fallacy of composition
2.) Association of causation
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Normative Analysis
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Value judgment on what "ought to be or should be" ( opinion.)
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Positive Analysis
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Views the economy "as it is " true conditions statements that can be proven.
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Fallacy of composition
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Is the mistaken assumption that what is true or one individual or group is true for all
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Association of causation
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Is the the mistaken assumption that 2 events occur at the same time one caused the other.
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Independent variable
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Is the variable that stands alone and causes the changes such as time.
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Dependent variable
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Is the variable that is being change or the effect
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4 types of slopes
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1.) positive
2.) negative
3.)infinitive slope
4.) zero slope
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Positive slope
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Direct or same relationship between the 2 variables increasing (A) ---increasing(B)
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Negative slope
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inverse, Indirect or opposite relationship decrease (A) ----> increase (B)
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