ECON 1102- Final Exam Guide - Comprehensive Notes for the exam ( 50 pages long!)
Document Summary
Incentives - rewards and penalties that motivate behavior. Trade-offs: opportunity cost - the value of what you give up when you make a choice. Important for 2 reasons: helps us evaluate trade-offs, understand behavior. Marginal thinking: making choices by comparing the extra benefit to the extra cost of an action. Power of trade: all involved in voluntary exchange are better off, power to increase production through specialization. Important for countries as well as individuals: allows us to take advantage of economies of scale. Wealth and growth: economic growth = increase in standards of living e. g. malaria contracted rates, wealthier countries have greatest access to sanitation facilities, antibiotics, etc. Institution matters: what makes a country rich, large amounts of physical and human capital, use of the latest technological knowledge. Booms and busts: no economy grows at a constant pace, booms and busts are part of the normal response to changing economic conditions.
