ECON 1000 Lecture Notes - Lecture 1: Externality, Political Philosophy, Market Failure
Document Summary
Chapter 1: economy: one who manages a household, resources are scarce (the limit of sth, scarcity: the limited nature of society"s resources, economics: how society manages its scarce resources. A study of mankind in the ordinary business of life: how ppl make decisions, principle 1: ppl face tradeoffs (a balanced between 2 desirable but incompatible) Efficiency: property of society getting the most it can get from its scarce resources (maximum) Equity: property of distributing economic prosperity among the society"s members: principle 2: the cost of sth is what u give up to get it. Opportunity cost: whatever must be given up to obtain some items: principle 3: rational ppl think of margin (edge) Rational ppl: ppl who systematically and purposefully do the best they can to achieve their objectives. Marginal changes: small incremental adjustments to a plan of action: principle 4: ppl respond to incentives (encouragement, motivation) Incentive: sth that induces a person to act.
