econ3 1 - 1-7-08Chapter 1What is economic?-social science...

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Unformatted text preview: 1-7-08Chapter 1What is economic?-social science study in individual and organization-interested in how they make decision-study of choices-scarcity(inability to satisfy everyone) cant satisfy everything-incentive (trade-off) are influence the choiceswe face trade-offso make choices (constraint)self-interest = individual think best for highest utilityoAdam Smith said self-interest can lead to the best choicesocial interest = best for society as whole+ Hard to choose!!! Self or society? Conflicts a lot of incentive-award encourage action-penalty discourage action1.Economic modela.Simplify down because so complicatedb.Reduce down to those only you need to see2.Ceteris Paribus (other things being equal)a.Other relevant things remain same3.opportunity costa.highest valued alternative (trade off, to give up to get other)4.margin (when franchise give small twist not big at once)a.small change in something (by small amount or by little at a time)i.extra or less unit5.marginal benefit...
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econ3 1 - 1-7-08Chapter 1What is economic?-social science...

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