ECO 1104 : Introduction to Microeconomics - ECO 1104 - Part 1

• School: University of Ottawa
• Department: Economics
• Course: ECO 1104
• Professor: Serge Nadeau

Document Summary

Principle three: rational people think at the margin: people make decisions by comparing bene ts and costs at the margin (marginal bene ts and marginal costs) - textbook pg. 8: marginal changes - small incremental adjustments to a plan of action. Principle four: people respond to incentives: people make decisions by comparing costs and bene ts - behavior may change when the costs or bene ts change, example: textbook pg. 19, #8: increases incentive to work, takes money away from those who cannot work and are the poorest. Principle five: trade can make everyone better off: trade allows people to specialize in what they do best, everyone is better off with trade, example: textbook pg. 19 #9: example: buying a shirt; both the customer and salesperson are happy, specialization. Principle six: markets are usually a good way to organize. Principle seven: the government can sometime improve market.