[EC 110] - Midterm Exam Guide - Everything you need to know! (23 pages long)

• School: University of Alabama
• Department: Economics
• Course: EC 110
• Professor: Harold Elder

Document Summary

Scarcity: society has less to offer than people wish to have. People face tradeoffs: to get one thing, you have to give up another. Thinking at the margin: compare extra benefits against extra costs. Decision to change occurs when marginal benefit > marginal cost. The production possibilities frontier is a graph that shows the combinations of output that the economy can possibly predict. ***efficiency: you can"t increase the output of one good without decreasing the output of another good. Society is getting the max benefits from its scarce resources(regulating cable prices, prohibiting smoking in public places, breaking up standard oil into smaller companies, and instituting laws against driving while intoxicated. ***equality: means that those benefits are distributed uniformly among society"s members. Providing some poor people with vouchers that can be used to buy food and imposing higher personal income tax rates on people with higher incomes are examples of activities motivated by equality.