Textbook Notes (368,122)
United States (205,946)
Economics (294)
ECON 201 (43)
Dr.Neri (10)

Macroeconomics 1.docx

2 Pages
Unlock Document

ECON 201

Macroeconomics Chapter 1  Scarcity: the limited nature of society’s resources.  Economics: the study of how society manages scarce resources.  Principle 1: People Face Tradeoff’s  “no such thing as a free lunch”  Give up something to get another  Guns and butter, efficiency and equality  Efficiency: property of society getting the most it can from its scarce resources (size of pie)  Equality: property of distributing economic prosperity uniformly among the members of society (how pie divided)  Principle 2: The cost of Something is What you Give up to Get it  Opportunity cost: whatever must be given up to obtain some item.  Principle 3: Rational People Think at the Margin  Rational people: people who systematically and purposefully do the best they can to achieve their objectives.  Marginal change: a small incremental adjustment to a plan of action.  Rational people make decisions by comparing marginal benefits and change.  When things are plentiful the marginal benefit is low.  Principle 4: People Respond to Incentives  Incentive: something that induces a person to act  Increase price tells sellers to produce more and buyers to buy less.  Taxes- gas taxes incentive to drive small cars.  Principle 5: Trade Can Make Everyone Better Off  Trade allows us to specialize in what we do best and buy a greater variety of goods and service at a lower price.  Principle 6: Markets are Usually a Good Way to Organize EconomicActivity  Market economies: an economy that allocates resources through the decentralized decisions of many forms and households
More Less

Related notes for ECON 201

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.