ECN 104 Chapter Notes - Chapter 1: Externality, Market Power, Market Failure
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24 Oct 2014
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Scarcity: the limited nature of society"s resources (land, natural resources, worker"s time all limited in its availability) Economics is about how the society manages its limited resources. Firms: what to produce, how much to produce, how many workers to hire. Individuals (consumers): what to purpose, how much to save, how many hours to work. 8 principle of decision making (4 individual decision, 3 how people interact with one another, and 1 the entire economy) Tradeoffs: to get one thing, usually means to lose/give up something else. Thing of the allocations of time and money. Society face tradeoffs between efficiency and equity. Acknowledging life"s tradeoffs is important b/c people are likely to make good decisions only if they understand the options that they have available. Efficiency can be referred to the economic pie, and equity to how the economics pie is divided among society"s members. Principle 2: the cost of something is what you give up to get it.
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