L1 - ECON 2106-C Professor Byung-Cheol Kim Byung What is...

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ECON 2106-C rofessor yung heol im Professor Byung-Cheol Kim
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What is economics? • . . . The word economy comes from a Greek word for “ ne who household ”The anagement of one who a household. The management of society’s resources is important because resources are . Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Economics is the study of how society manages its scarce resources.
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A household and an economy face many decisions: ho will work? ± Who will work? ± What goods and how many of them should be roduced? produced? ± What resources should be used in production? t what price should the goods be sold ± At what price should the goods be sold? ± Your examples l ± Your examples © 2007 Thomson South-estern
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Principles 1-4 OW EOPLE MAKE DECISIONS :HOW PEOPLE MAKE DECISIONS 1. People face . 2. The cost of something is what you give up to et it get it. 3. Rational people think at the . 4. People respond to . © 2007 Thomson South-estern
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Principle #1: People Face Trade-offs. • “There is no such thing as a free lunch!” • To get one thing, we usually have to give up other thing. another thing. • Guns v. butter ood v clothing • Food v. clothing • Leisure time v. work fficiency v equity • Efficiency v. equity • Your examples
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Principle #2: The Cost of Something Is hat You Give Up to Get It What You Give Up to Get It. • Decisions require comparing costs and benefits of alternatives. •Wh e th e r
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L1 - ECON 2106-C Professor Byung-Cheol Kim Byung What is...

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