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Prepared by Lee Sun, please refer to the disclaimer on the first page for more information. ~ 1 ~ PASS Summary Notes Session 1 2011 Prepared by PASS Leader and PASS Coordinator: Lizhe (Lee) Sun Disclaimer: These notes are personal collections of past notes with the editor’s individual notes that were edited and then compiled. The editor, Lee Sun, does not guarantee or take any responsibility for the correctness of these notes. These notes prepared for students that participate in the Australian Business School’s PASS Program and are to be used at your own discretion. Every effort has been made to include all references that were used in making these notes and the editor sincerely wishes that apologies will be accepted for any errors or omissions. For questions regarding any materials related to the course Macroeconomics (ECON1102) at the University of New South Wales, please always refer to the textbook, lecture notes and other course authorities excluding the contents contained in this document. Except as permitted by the Copyright Act 1968, no part of this document may in any form or by any electronic, mechanical, photocopying, recording, or any other means be reproduced, stored in a retrieval system or be broadcast or transmitted without the prior consent of the editor. Content: This set of notes specifically covers the first 8 weeks of the Microeconomics Course (ECON1101) course. Section 1 contains a summary based on book chapters. Section 2 contains weekly practice questions which covered during the PASS classes. The answers to these questions were given during the PASS classes which you have attended. Note: the ordering of the materials may be different to the order of how the materials were presented to you. Prepared by Lee Sun, please refer to the disclaimer on the first page for more information. 2011 S1 1
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ECON1101: Microeconomics 1A CHAPTER 1 Thinking Like An Economist Economics Economics study of how people make choices under conditions of scarcity and the results of these choices for society. Scarcity principle although we have boundless needs and wants, the resources available to us are limited. So having more of one thing leads to having less of another. Cost-benefit analysis an individual (or firm, society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs (benefits exceed its costs). Note that the economic definition of “best” takes into account both the benefits and costs of different class sizes. Applying the Cost-Benefit Principle People are assumed to be rational (someone with well-defined goals who tries to fulfil those goals as best he or she can). It can be difficult to propose reasonable measures of the relevant benefits and costs when imposing cost-benefit rule. Only make decisions that create additional economic surplus.
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