Micro Notes Week 1 & 2 - Microeconomics Notes Lawrence...

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Microeconomics Notes Lawrence Lafauci (LA-FOW-CHI) Week One Wednesday, March 8, 2017 (continued in week 2: Monday, March 13, 2017) Microeconomics – focused on the firm and industry economy rather than US as a whole Need textbook – can get online or physical copy The 10 Economic Principles: How people make decisions: 1. People face tradeoffs –in order to get something you have to give something (Opportunity Cost) 2. The cost of something is what you give up to get it 3. Rational People Think at the Margin – benefit must be greater than cost 4. People respond to incentives How People Interact: 5. Trade can make everyone better off 6. Markets are usually a good way to organize economic activity 7. The government can sometimes improve market outcomes How the economy as a whole works: 8. A country’s standard of living is based upon its ability to produce goods and services 9. Prices rise when the government prints too much money 10. Society faces a short run tradeoff between unemployment and inflation
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