ECON 201 Chapter Notes - Chapter 1-2: Opportunity Cost, Comparative Advantage
29 Jan 2019
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Scarce: a resource is scarce when there isn t enough to satisfy all of our wants. Great economic plan: how to arrange our scarce resources to satisfy as many of our wants as possible. Opportunity cost: the opportunity cost of a choice is the value of the opportunities lost. Inflation: an increase in the general level of prices. Big idea two: good institutions align self-interest with the social interest. Big idea six: the importance of wealth and economic growth. Big idea eight: economic booms and busts cannot be avoided but can be moderated. Big idea nine: inflation is caused by increases in supply of money. Big idea ten: central banking is a hard job. The biggest idea of all: economics is fun!! We will focus on the three benefits of trade: trade makes people better off when preferences differ, trade increases productivity through specialization and the division of knowledge, trade increases productivity through comparative advantage.
