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Unformatted text preview: Ch r ista Palazzo: Econom ics Study Gu i de Economics- study of the choices consumers, business managers and government officials make to attain their goals, given their scarce resources. It is a social science because it uses the scientific method (developing models, testing a hypothesis and revising models) to study individuals reactions. 85% standard of explanation. Market-group of buyers and sellers of goods or services and the place where they come together to trade Three important ideas within markets : 1. People are rational- assume people use all available resources. Benefits outweigh costs 2. People respond to economic incentives- ex. Costs less for banks to deal with robbers than increase security 3. Optimal decisions are made at the margin- some decisions are “all of nothing” most are “little more little less” Marginal : The best decision is where marginal benefit = marginal cost Marginal analysis- way to compare MB and MC Fallacy composition (fake construction): True to individual true to group… yes or no Ex. At a game you cant see- stand on a chair- assume true for group but it might be harder for others to see. Fire safety its true to group IF you follow instructions. Post Hoc Fallacy : Event A –-caused Event B Assume this you commited post hoc. Ex. A. throws chair throw window B. Window Breaks } true A caused B In the real world there are many causes A B C D could be A D B C Correlation- seem to happen after each other for no cause or reason....
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