A COM 265X Study Guide - Midterm Guide: Market Power, Business Cycle, Externality
Document Summary
Economics: study of how society manages its scarce resources. How people decide how much to work. How society decides how to divide its resources between national defense, consumer goods, protecting the environment, etc. Goods and services: prices rise when the government prints too much money. All decisions involve trade offs (trading off one goal in exchange for another) Ex: going to party = less time to study. Ex: having more $ means working more = less time to relax. Society faces an important trade off : efficiency vs equality. Efficiency: society is getting the most it can from its scarce resources. Equality: when prosperity is distributed uniformly among society"s members. Getting max benefits from resources or benefits uniformly distributed in. When gov policies are designed, these two goals often conflict. Tradeoff : to achieve greater equality, gov could redistribute income from wealthy to poor---
