Principles of Economics- Mankiw (5th) 1

Principles of Economics- Mankiw (5th) 1 - sources among its...

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IN THIS CHAPTER YOU WILL . . . Discuss how incentives affect people’s behavior Learn the meaning of opportunity cost Learn that economics is about the allocation of scarce resources Examine some of the tradeoffs that people face See how to use marginal reasoning when making decisions The word economy comes from the Greek word for “one who manages a house- hold.” At first, this origin might seem peculiar. But, in fact, households and economies have much in common. A household faces many decisions. It must decide which members of the household do which tasks and what each member gets in return: Who cooks din- ner? Who does the laundry? Who gets the extra dessert at dinner? Who gets to choose what TV show to watch? In short, the household must allocate its scarce re-
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Unformatted text preview: sources among its various members, taking into account each member’s abilities, efforts, and desires. Like a household, a society faces many decisions. A society must decide what jobs will be done and who will do them. It needs some people to grow food, other people to make clothing, and still others to design computer software. Once soci-ety has allocated people (as well as land, buildings, and machines) to various jobs, T E N P R I N C I P L E S O F E C O N O M I C S 3 Consider why trade among people or nations can be good for everyone Discuss why markets are a good, but not perfect, way to allocate resources Learn what determines some trends in the overall economy...
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