ECON 1BB3 Chapter Notes - Chapter 1-6: Externality

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

10 priniciples of economics: people face tradeoffs (ex. equity vs efficiency is society or guns and butter , the cost of something is what you give up to get it (largest cost in uni is time , rational people think at the margin (margin means edge, a rational person makes a decision only if the marginal benefit outweighs the marginal cost, people respond to incentives (must consider all effects example with seatbelts and pedestrians, trade can make everyone better off, markets are usually a good way to organize economic activity, governments can sometimes improve market outcomes (upholding property rights and limiting inefficiencies and inequalities, a country"s standard of living depends on its ability to produce goods and services (living standard=based on level of productivity, prices rise when the government prints too much money (more expensive goods, society faces a short run tradeoff between inflation and unemployment.