Micro Book Chap 1.docx

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Department
Economics
Course
ECON 1010
Professor
John Brock
Semester
Spring

Description
ECON 1010 Book Notes Chap 1 Economics- All about scarcity. -Limited resources vs. unlimited wants -How society manages resources Ten Principles of Economics Principle 1: People Face Trade Offs -People must choose what to give up in order to attain something else. -Efficiency -Society is getting max benefits from its scarce resources. -Equality -Those benefits are distributed evenly among the society’s members. *Efficiency is the size or quantity of goods where equality is how goods are divided. Principle 2: The Cost of Something is What You Give Up to Get It -Opportunity Cost is what must be given to attain an item. Time, money, goods, etc. 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 Changes -Small incremental adjustments to existing plans of action. -Marginal benefit is the value associated with the availability and use of an item. Depends on how many units a person has. * Marginal Benfit is how much something is worth to an individual and, commonly, at a point will decrease with the increasing number of items. Principle 4: People Respond to Incentives -An Incentive is something that induces a person to act. -People respond to incentives in good and bad ways. EX. Increased safety  decreased caution Principle 5: Trade Can Make Everyone Better Off -Everyone is in competition wit
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