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Sept 08 note - Ten principles of Economics.docx

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Department
Economics
Course
ECON 1B03
Professor
Hannah Holmes
Semester
Fall

Description
Ten principles of Economics (Ch 1) 08/09/2008 3 areas of economic  How people make decisions - Individual make decision (individual people/firm) 1) People face tradeoffs – equity vs. efficiency 2) The cost of something is what you give up to get it Opportunity cost As we become more efficient, we become less equitable (distribution) 3) Rational people think at the margin Economic assume most people are rational most of the time IE: Starbuck coffee vs. Time Horton coffee Same price, quality, size Take cheaper one as any normal people would do Compare the two Benefit vs. cost/earning 4) People respond to incentives Purpose of doing something Taxes raised on smoke so less people have health problem which the government save on health fees  How people interact 5) Trade can make every better off Can not will Main export – natural resources 1
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