Intro MicroEcon Test Review 1

Intro MicroEcon Test Review 1 - Chapter One: Economics is...

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Chapter One: Economics is about the allocation of scarce resources That individuals face trade-offs The meaning of opportunity cost How to use marginal reasoning when making decisions How incentives affect people’s behavior Why trade among people or nations can be good for everyone Why markets are a good, but not perfect, way to allocate resources What determines some trends in the overall economy How people make decisions How people interact How the economy works as a whole 1. The fundamental lessons about individual decision making are that people face trade- offs among alternative goals, that the cost of any actions is measured in terems of forgone opportunities, that rational people make decisions by comparing marginal costs and marginal benefits, and that people change their behavior in response to the incentives they face. 2. The fundamental lessons about interactions among people are that trade can be mutually beneficial, that markets are usually a good way of coordingating trades
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This note was uploaded on 11/02/2008 for the course ECON 304 taught by Professor Greenlaw during the Spring '07 term at Mary Washington.

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Intro MicroEcon Test Review 1 - Chapter One: Economics is...

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