❮ 41
Fundamentals of
Economic Analysis
IN THIS CHAPTER
Summary: If there are two concepts that you should have down pat, they are:
(1) scarce resources require decision makers to make decisions that involve
costs and benefits, and (2) these decisions are best made when the additional
benefits of the action are exactly offset by the additional costs of the action.
This chapter presents material that, at least on the surface, appears to be
“Econ-lite.” Some readers might make the mistake of simply glossing over it
on the way to meatier topics. I urge you to take the time to reinforce these
early concepts, for they should, like a bad commercial jingle, stick in your
subconscious throughout your preparation for the AP exam.Key Ideas
✪ Scarcity
✪ Opportunity Cost
✪ Marginal Analysis
✪ Production Possibilities
✪ Functions of Economic SystemsKEY IDEA
5
CHAPTER