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Lecture

inclass note

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Department
Economics
Course Code
ECON 1001
Professor
Paul Haddow

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Economics: Chapter 1:  Ten principles of economics: 1.  People face trade offs (individuals, societies)   ­efficiency vs equity         ­ efficiency: get the most of what you have ­national defense vs census  ­current vs future consumption  2.  The cost of something is what you give up to get it    ­ nothing is free and you need to give up something to get it  ­making decisions require comparing the costs and benefits of alternative choices ex: what did you give up? What is the cost of what you gave up?         ­University being paid for and being entirely free vs giving up a salary and             being able to make an income because you’re going to school 3. Rational people think at the margin ­margin: making a choice to do something a little more that will maybe give you a  benefit marginal benefit is what you earn cost is what you give up subcosts are yesterdays costs and does not effect your future decision ex: spending 100 last week on your car has no bearing on fixing your transmition and  anything previous is irrelevant 4.  People respond to incentives  exs: cost and prices – tax cigerettes in hopes to reduce smoking  market prices: price goes up because there are not enough of that product so instead  people start making it which generates reaction from the consumers  5. Trade can make everyone better off  negotiable: instead of being self sufficient you can exchange. It is for other goods but  there is a price  ­countries benefit from trade and specialization because people can specialize in what  they are good at which makes the society better  ex: seatbelts save lives but cause more accidents because people drive faster  6. Governments can sometimes improve market outcomes  ­markets are usually a good way to organize  ­markets are groups of buyers and a conceptual thing. Ex: teenage girls, pregn. Moms ­markets organize economic activity  7. Markets are usually a good way to organize economic
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