Textbook Notes (368,696)
United States (206,099)
Economics (307)
ECON 1901 (44)
Chapter 1

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Department
Economics
Course
ECON 1901
Professor
Nathan Blascak
Semester
Spring

Description
Chapter 1: The Big Ideas I.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) II.Good Institutions Align Self-Interest with the Social Interest • when self-interest and social interest are at odds we get bad outcomes • Adam Smith claimed that in good markets, those who act in their own self-interest promote social interest by being guided by an “invisible hand” • regulations can help align self-interest with social-interest III.Trade-Offs are Everywhere A.Opportunity cost 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 IV. Thinking on the Margin • thinking on the margin-thinking in terms of marginal benefits/marginal losses • usef
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