ECON1131 Midterm: Economics Midterm 1 review.docx
Document Summary
Economics of interaction principles: resources are scarce land, labor, capital, entrepreneurship, the true cost is the opportunity cost what you must give up, the value of your. Next best alternative: how much is a decision at the margin, people respond to incentives and exploit opportunities to make themselves better. Their labor: overall spending sometimes gets out of line with the economy"s productive capacity. Spending falls short of what is needed to keep workers employed: government policies can change spending. Efficiency taking all opportunities to make some better off without making some worse. Which simplifications to make in a model, or the values of normative. Competitive market many buyers and sellers selling the same good/service. Demand schedule how much of a good that consumers will want to buy at different. Law of demand as price goes down, qd goes up (inverse relationship) Curve is caused by a change in one of the non-price determinants of demand.
