Chapter 1 Summary

Chapter 1 Summary - Chapter 1 Summary- All economic...

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Unformatted text preview: Chapter 1 Summary- All economic analysis is based on a list of basic principles. These principles apply to three levels of economic understanding. First, we must understand how individuals make choices; second, we must understand how these choices interact; and third, we must understand how the economy functions overall.- Everyone has to make choices about what to do and what not to do. Individual choices is the basis of economics if it does not involve choices, it is not economics.- The reason choices must be made is that resources anything that can be used to produce something else are scarce. Individuals are limited in their choices by money and time; economies are limited by their supplies of human and natural resources.- Because you must choose among limited alternatives, the true cost of anything is what you must give up to get it - all costs are opportunity costs.- Many economic decisions involve questions not of whether but of how much how much to spend...
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