ECON 1901 Chapter Notes - Chapter 1: Opportunity Cost, Unemployment Benefits, Invisible Hand
16 Mar 2014
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Chapter 1: the big ideas: incentives matter, incentive- rewards/penalties that motivate behavior, economists believe that people respond in predictable ways to incentives of all kinds(generally in their own self interest) 1. opportunity cost-the value of the opportunities lost a. )if you don"t understand the opportunities you are losing, you don"t understand the trade-offs b. ) to understand behavior, you must understand opportunity cost. The importance of wealth and economic growth: wealthiest countries have the highest rate of infant survival, wealth brings women"s rights & political liberties. Vii. institutions matter: incentives are what causes some countries to be richer than others. Viii. economic booms and busts cannot be avoided but can be moderated: unemployment insurance can cushion the blow of a recession.
