ECN 104 Study Guide - De Beers, Longrun, Marginal Product
18 Apr 2013
School
Department
Course
Professor
Document Summary
All decisions involve giving up one thing for another. How much to work, save, and spend. How firms decide how much to produce, How society decides how to divide its resources between national defence, consumer goods, protecting the environment, and other needs. The study of how society manages its scarce resources, e. g. chapter 1 ten principles of economics. Society faces an important trade-off: efficiency vs. To achieve greater equality, redistribution of income from wealthy to poor is required through the progressive tax system, food stamps and unemployment insurance. However this reduces incentive to work and produce, and as a result shrinks the economic pie . Rather than being self-sufficient, people can specialize in producing one good or service and exchange it for other goods. Rational people systematically and purposefully do the best they can to achieve their objectives by evaluating cost and benefits of marginal changes. The cost of something is what you give up to get it.
