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ECN 204 (282)
Chapter 1

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ECN 204
Christos Shiamptanis

Chapter 1Ten Principles of Economics How people make decision Scarcitythere are limited natural resources and cannot produce all the goods and service people wish to have Economicsit is how society manages its scarce resourcesPrinciple 1People Face tradeoffsWe have to give off one thing for anotherFor every dollar a person spend he or she has one less dollar to spend also ex time Classic tradeoffguns and butter the more money government spends on protecting the shores and less money spend on consumer goods to raise our standard of livingEfficiencythe society is getting the most from its resourcesEquitythe resources are equally distributed within the society o Efficiency is the economic pie and the equity is how the pie is equally dividedGovernment take money from the rich to the poor results in reducing the reward for the hard working and reward people that work less Principle 2The Cost of Something is what you give up to get it Ex Go to Uni or collegeThe individual is giving time money and work to go to uni or college o Tuition books room food time Opportunity costis whatever an individual has to give up so he or she can obtain some itemPrinciple 3Rational People think at the margin Rational Peoplesystematically and purpos
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