Textbook Notes (363,418)
Canada (158,365)
Economics (727)
ECON 1BB3 (332)
Chapter 1

Chapter 1 - Ten Principles of Economics

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McMaster University
Bridget O' Shaughnessy

thEconomics Textbook Notes February 4 2012Chapter 1Ten Principles of EconomicsEconomy comes from the Greek word one who manages a householdScarcity the limited nature of societys resourcesEconomics The study of how society manages its scarce resourcesAn economy is a group of people interacting with one another 10 principles of economics 1 People face tradeoffs To get one thing that we want we usually have to give up another thingWhen people are grouped into societies they face different kinds of tradeoffsThe classic tradeoff is between guns and butterThe more we spend on national defense guns to protect our shores from foreign aggressors the less we can spend on consumer goods butter to raise our standard of livingAlso the tradeoff between a clean environment and a high level of incomeFurthermore the tradeoff between efficiency and equity Efficiency the property of society getting the most it can from its scarce resources Equity the property of distributing economic prosperity fairly among the members of society Knowing that people face tradeoffs does not by itself tell us what pe
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