Economics: the study of how society manages its scarce resources. The cost of something is what you give up to get (cid:513)opportunity cost(cid:514). Rational - people who thoughtfully, systematically make. Thinking on the margin - comparing the (cid:513)costs/benefits(cid:514) good decisions to pursue their goals. of incremental (cid:513)small(cid:514) changes to your current situation. change people"s behavior. (cid:467). People respond to incentives (cid:513)reward/punishment(cid:514) designed to (cid:468). Trade can make both parties involved better off (cid:513)efficient(cid:514). (cid:469). Markets are usually a good way to organize economic activity. Organize economic decisions daily - making all the economic decisions daily. (cid:464). Who gets good/service once it is made? (cid:470). Countries whose workers produce a large quantity of produce goods and services. goods and services per unit of time enjoy a high standard of living (cid:472). When a government creates large quantities of the nation"s money, the value of the money falls. as a result, prices increase, Society faces a short-run tradeoff between inflation and.