Econ Notes Ch 1 - Econ Chapter 1: Ten Principles of...

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Econ Chapter 1: Ten Principles of Economics Scarcity: society has limited resources and therefore cannot produce all the goods and services people wish to have. 1. People face Trade-offs a. “There is no such thing as a free lunch.” i. Doing something/using a resource for something takes away from time/resources that could have been spent doing something else. ii. “guns and butter”—more we spend on national defense, the less can be spent on consumer goods b. Efficiency vs. Equity i. Efficiency —the property of society getting the most it can from its scarce resources ii. Equity —the property of distributing economic prosperity failry among the members of society iii. When government tries to divide wealth more equally, (income tax, etc.) and punish those who work harder/have more, people work less, by dividing the pie more equally, pie in turn becomes smaller 2. The Cost of Something is What You Give Up to Get It a. Opportunity cost —whatever must be given up to obtain some item
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Econ Notes Ch 1 - Econ Chapter 1: Ten Principles of...

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