ECON 20A Study Guide - Midterm Guide: Time Horizon, Tax Incidence, Market Clearing
Document Summary
Scarcity branch of knowledge that deals with production, distribution, consumption and. Economics how society manages with scare or limited resources. Everything is scare; water, ipad, seats in classroom transfer of wealth. Uncoordinated decisions of millions of individuals making decisions. Economics studies all of these forces decision making by individuals, by firms, govt. Interactions of people through markets is the reason why it works institutions. We begin studying by how markets operate to allocate in a perfect world. However there are failures, and then a study how the government can intervene or solution could be found. The study of how households, firms interact in markets. Wide phenomena such as inflation, unemployment and economics growth. Part of thinking like an economical is recognizing this. Ex: calling in sick to go on a friend"s yacht: the key to sound decision making is secondary opportunity cost. A marginal change is a small incremental adjustment to a plan or action.
