This chapter introduces some key economic concepts, including: - Economics involves making choices about what, how, and for whom to produce due to scarce resources. - Market mechanisms and government intervention both play a role in determining production and allocation in different economies. - Economists study how economies function at both the macro and micro levels using theoretical models.

1. Economics: The Core Issues Chapter 1

16. A Production Possibilities Curve A B C D E F OUTPUT OF TRUCKS 5 4 3 2 1 0 1 2 3 4 5 OUTPUT OF TANKS

18. Losses OUTPUT OF ASSISTS A B C Y 5 4 3 2 1 0 1 2 3 4 5 OUTPUT OF POINTS Losses Page 12.

21. Law of Increasing Opportunity Costs Step 1: give up one truck Step 2: get two tanks Step 3: give up another truck Step 4: get one more tank A B C D E F OUTPUT OF TRUCKS 5 4 3 2 1 0 1 2 3 4 5 OUTPUT OF TANKS

23. The Cost of North Korea’s Military MILITARY OUTPUT FOOD OUTPUT A O B Reduced food output Military buildup N D P H C G

24. The Military Share of Output

27. A Point Inside the Curve OUTPUT OF TANKS A B C Y 5 4 3 2 1 0 1 2 3 4 5 OUTPUT OF TRUCKS Some resources are unemployed or used inefficiently

29. A Point Outside the Curve OUTPUT OF TANKS A B C X 5 4 3 2 1 0 1 2 3 4 5 OUTPUT OF TRUCKS Currently not attainable

31. Economic Growth 0 OUTPUT OF TANKS OUTPUT OF TRUCKS PP 1 PP 2

62. Economics: the Core Issues End of Chapter 1