ECO 1102 Chapter Notes - Chapter 1-3: Demand Curve, Economic Model, The Main Point

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20 Nov 2017
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ECO 1102 Full Course Notes
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ECO 1102 Full Course Notes
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Chapter 1: economics: foundations and models: economics in life, basic fact of life: people all have to make choices. Because of scarcity: three key economic ideas, people are rational. It means that people make decisions and take the actions that they believe will make them happy. Economists don"t think people deliberately do things to make themselves worse off. If producing the next unit increases costs more than revenue, making that unit will actually reduce profits. You"ve now maximized profits and net benefits: the economics problems all societies must solve, all societies face trade-offs. Is determined by the choices that consumers, firms, and governments make. Depends largely on how income is distributed. Governments can change the income distribution through taxation and transfers (redistribution): centrally planned economies versus market economies. One extreme is the centrally planned economy, in which an individual or group of people (generally the government) directly answers all three questions.

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