Textbook Notes (367,893)
Canada (161,477)
Economics (923)
ECN 104 (388)
Chapter 1

Chapter 1 - Ten Principles of Economics

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ECN 104
Tsogbadral Galaabaatar

Chapter 1 What Economics Is All AboutScarcitythe limited nature of societys resourcesEconomicsthe study of how society manages its scarce resources eghow people decide what to buyhow much to work save and spendhow firms decide how much to producehow many workers to hirehow society decides how to divide its resources between national defence consumer goods protecting the environment and other needs HOW PEOPLE MAKE DECISIONSSociety faces an important tradeoffefficiency vs equality Efficiencywhen society gets the most from its scarce resourcesEquitywhen prosperity is distributed uniformly among societys membersTradeoffTo achieve greater equalitycould redistribute income from wealthy to poorBut this reduces incentive to work and produce shrinks the size of the economic pie Making decisions requires comparing the costs and benefits of alternative choicesThe opportunity cost of any item iswhatever must be given up to obtain itIt is the relevant cost for decision makingExamples
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