ECON 1 Lecture Notes - Lecture 1: Invisible Hand, Externality, Economic Equilibrium
Document Summary
10 principles of economics idea 1 resources are limited. Scarcity-*resources are limited*- the limited nature of society"s resources. Incentives- something that induces a person to act (ie the prospect of reward or punishment) Market- group of buyers and sellers (not necessarily in same location) Market economy- allocates resources through the decentralized decisions of many households and rms as they interact in markets. When verizon makes iphones , demand will go up and they will quickly raise prices. Invisible hand - somehow there is a force to promote general economic well being within households and rms. Markets are usually a good way to organize economic activity. Price is main driver for choosing which tradeoff. Going to a movie- takes money and time. Money for tickets+ value for time (could have been working/studying, etc) Communism where everyone is the same is not healthy economy nor is ignoring the poor. Ef ciency- when society gets the most from its scarce resources.
