CAS EC 101 Lecture Notes - Phillips Curve, Marginal Utility, Marginal Cost
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CAS EC 101 Full Course Notes
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Document Summary
Economics is the study of how society manages its scarce resources. In most societies, resources are allocated not by an all-powerful dictator but through the combined choices of millions of households and firms. Efficiency - making the most out of scarce resources. Equality - benefits are rationed equally between each member of society. Opportunity cost of an item is what you give up to get that item. When making any decision, decision makers should take into account the opportunity costs of each possible action. Incentive - reward or punishment that causes someone to act in a particular way. In a market economy, the decisions of a central planner are replaced by the decisions of millions of firms and households. Households work for firms and pay money for products. Taxes negatively affect the allocation of resources by affecting prices of goods and. Market failure - market fails to efficiently allocate its resources.
