1 Book Notes. Econ 201

1 Book Notes. Econ 201 - 1Book Notes. Econ 202 Scarcity:...

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1Book Notes. Econ 202 Scarcity: the limited nature of society’s resources Economics: The study of how society manages its scarce resources Economists study how people make decisions and how they interact with each other. They then analyze forces and trends that affect the economy as a whole. PRINCIPLES OF INDIVIDUAL DECISION MAKING: 1. People Face Trade-Offs a. “Guns or Butter” b. Efficiency v. Equality b.i. Efficiency: the property of society getting the most it can from its scarce resources b.ii. Equality: the property of distributing economic prosperity uniformly among the members of society b.iii. Efficiency: Size of the Economic Pie b.iv. Equality: How the pie is divided to individual slices b.v. When the government tries to cut the pie into more equal pieces, it gets smaller. 2. The Cost of Something is What You Give Up to Get It a. Opportunity Cost: Whatever must be given up to obtain some item 3. Rational People Think At The Margin a. Rational People: People who systematically and purposefully do the best they can to achieve
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1 Book Notes. Econ 201 - 1Book Notes. Econ 202 Scarcity:...

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