Chap_01 - Economy. . . The word economy comes from a Greek...

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Economy. . . The word economy comes from a Greek word for “one who manages a household.” Management implies decisions. Economics is about choice and decisions . There are different levels of decisions and different types of people who make decisions. Individuals make decisions. Households make decisions. Managers and firms make decisions. Bureaucrats and governments make decisions.
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SEVEN PRINCIPLES OF MICROECONOMICS The Mankiw textbook has TEN Principles but # 8, 9 and 10 are Principles of Macroeconomics (so I’ll skip them—you can read about them).
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Principle #1: People Face Tradeoffs. “There is no such thing as a free lunch!”
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Principle #1: People Face Tradeoffs. In Waikiki, you can get an invitation to a free lunch where a speaker will “inform” you about time share condominiums and then tell exactly WHY YOU MUST PURCHASE ONE NOW!!! BEFORE YOU LEAVE THE ROOM!!! Is that lunch really free?
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Making decisions requires trading off one goal against another. Principle #1: People Face Tradeoffs. Tradeoffs are everywhere: Policymaker: armor for soldiers in Iraq v. dialysis for kidney disease patients v. drug rehab for addicts. Student: watching an NFL playoff game v. reading chapter in this class’s textbook. Bill Gates: leisure time v. work time.
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Efficiency v. Equity Efficiency means society gets the most that it can from its scarce resources. Equity
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Chap_01 - Economy. . . The word economy comes from a Greek...

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