EC120 Midterm: EC120 MIDTERM 1 EXAM NOTES.docx
30
EC120 Full Course Notes
Verified Note
30 documents
Document Summary
Economics: study of how society manages its scare resources; How people decide what to buy, how much to work, save, and spend. How firms decide how much to produce and how many workers to hire. How society decides how to divide resources between competing interests. Microeconomics: a branch of economics to study the behavior of consumers and producers. Efficiency: when society gets the most out of its scare resources. Equity: when prosperity is distributed more fairly among member of society. Redistribution is generally accomplished through a progressive tax system and social programs. Opportunity cost: of an item is whatever must be given up to obtain it. Rational people make decisions by evaluating costs and benefits of marginal changes, they only take action if marginal benefits exceed marginal costs. Incentive: something to induce a person to act. Individuals benefit from trade and specialization, it is inefficient for one individual to produce everything themselves.
