ECON 2200- Final Exam Guide - Comprehensive Notes for the exam ( 39 pages long!)
Document Summary
Five foundations of economics: incentives, trade-offs, opportunity cost, marginal thinking, trade creates gain (or value) The economic problem: our wants exceed our means, wants are theoretically unlimited, resources are scarce, we all must cope with scarcity. Economics: how people use scarce resources to satisfy unlimited wants, (cid:862)e(cid:272)o(cid:374)o(cid:373)i(cid:272)s is the study of the (cid:449)ay i(cid:374)di(cid:448)iduals, fi(cid:396)(cid:373)s, go(cid:448)e(cid:396)(cid:374)(cid:373)e(cid:374)ts, a(cid:374)d so(cid:272)ieties make decisions to allo(cid:272)ate li(cid:373)ited (cid:396)esou(cid:396)(cid:272)es to (cid:272)o(cid:373)peti(cid:374)g (cid:449)a(cid:374)ts. (cid:863) Economics assumes that people: are rational, are self-interested, respond to incentives. Automatic assumptions: different individuals can have different tastes and preferences, different individuals can operate under different ethics and beliefs, different individuals can have different goals, different individuals can have access to different information. General commonalities: we can learn from mistakes, we all have the desire to maximize our utility, we are limited by imperfect information, our behavior is often predictable. I(cid:374)(cid:272)e(cid:374)ti(cid:448)es: fa(cid:272)to(cid:396)s that (cid:373)oti(cid:448)ate us to (cid:373)ake de(cid:272)isio(cid:374)s a(cid:374)d (cid:272)a(cid:374) (cid:271)e : positive/negative, direct/indirect.
