notes - Introduction: three economic principles Scarcity:...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Introduction: three economic principles Scarcity: the situation in which unlimited wants exceed the limited resources, e.g. oil, funds, time Scarcity is called the economic problem . If there is no scarcity, we do not need to worry about everything, output, etc. economics studies how to make the best of limited resources. Scarcity has to be something that people want If something is unlimited then it is not scarce Economics is the study of the choices people and firms make to attain their goals given their scarce resources When firms make choices: getting started, must decide where to get money Countries, governments also face choices Principle #1: people face choices/tradeoffs: o To get one thing, we usually have to give up another thing. Food v. clothing, leisure time v. work, guns v. butter (civilian production), efficiency v. equity Tradeoff: efficiency v. equity Efficiency means we get the most out of the scarce resources. Equity means the benefits of those resources are distributed fairly among members of the society In many cases we do not use the resources efficiently. What do we mean by “fair?” Market often determines value of contribution, but often the government needs to step in. Why are efficiency and equity contradictory? Efficiency can lead to exploitation,
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

notes - Introduction: three economic principles Scarcity:...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online