Chapter 1 Notes - Vandan Desai ECON 102Principles of...

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

View Full Document Right Arrow Icon
Vandan Desai ECON 102—Principles of Macroeconomics 1 Chapter 1—The Central Idea (Lecture glyph1197otes) Central idea of economics —people make powerful choices with scarce resources and interact with other people when they make these choices Economics —study of how people deal with scarcity o All individuals face scarcity in one form or another square4 Scarcity —situation in which quantity of resources is insufficient to meet all wants o Scarcity forces people to make choices square4 Choice —a selection among alternative goods, services, or actions Economic interaction —exchanges of foods and services between people Market —arrangement by which economic exchanges between people take place I. Scarcity and Choice for Individuals A. Consumer Decisions i. Budget constraint —limit on amount of money available to spend ii. Choices create opportunity cost of not doing one thing b/c another thing is chosen iii. Opportunity cost —the value of the next-best forgone alternative that was not chosen because something else was chosen iv. Gain from trade —improvements in income, production, or satisfaction owing to the exchange of goods or services 1. Goods/services allocated in ways that are more satisfactory to people 2. Trade permits specialization through the division of labor B. Producer Decisions i.
Image of page 1

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

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

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern