ECO 211 Lecture Notes - Lecture 1: Opportunity Cost, Economic Surplus, Business Cycle
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ECO 211 Full Course Notes
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Principle 1: people face tradeoffs: guns vs butter: if an economy allocates more resources towards weapons it can produce less commodities, efficiency maximum benefits from scarce resources, equality benefits are distributed uniformly among society"s members. Efficiency is the size of the pie whereas equality is how the pie is divided into slices. Incentive something that induces a person to act: in europe high gasoline taxes are an incentive for people to drive smaller more fuel efficient cars. Principle 5: trade can make everyone better off: trade allows countries to specialize in what they do best and to enjoy a greater variety of goods and services. The chinese are as much our partners in the world economy as they our competitors. Principle 6: markets are usually a good way to organize economic activity: market economy an economy that allocates resources through the decentralized decisions of many firms and households as they interact in markets for goods and services.
