Jan 13 (week one) - o Decisions involve trade offs o...

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EC 201 Jan 13, 2009 What does an economist do? Economics: study of production, distribution, and consumption of goods and services Microeconomics: study of how individuals make decisions and how would those decisions interact o Why make decisions Resources are scarce Resources? Land, labor, and capital Scarce? More of one thing and less of mind. “no free lunch” o Opportunity cost = real cost Going to class: loss of free time
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Unformatted text preview: o Decisions involve trade offs o Benefits - cost = economic surplus People exploit opportunities to make them selves better off. People exploit opportunities to increase economic surplus. • The principle that people act to make themselves better off is the basis of all predictions by economists about individual behavior • Incentives: rewards for following a specific behavior...
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