ECON 102 Chapter Notes - Chapter 1: Air Traffic Control, Government Spending, Opportunity Cost
Document Summary
Economics is a study of mankind in the ordinary business of life - alfred marshall. Principles that underlie individual choice: the core of economics: principles #1: choices are necessary because resources are scarce. Resource: anything that can be used to produce something else. Scarce resource: not enough of resource available to satisfy all ways society wants to use it. Some decisions are best not left to individuals (a. 4. b. 1) hence, national parks: principle #2: the true cost of something is its opportunity cost. Opportunity cost: what you give up to get something. Monetary cost (money) vs opportunity cost: principle #3: how much is a decision at the margin. Marginal decisions: decisions about whether to do a bit more or a bit less. How much decisions require making trade-offs at the: principle #4: people usually respond to incentives, exploiting opportunities to margin: comparing costs & benefits of doing more vs less. Incentive: opportunity to make self better off (reward)
