Micro 1 - Chapter 1 Ten Principles of Economics 1. People...

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Chapter 1 Ten Principles of Economics 1. People face trade-offs efficiency - the property of society getting the most it can from its scarce resources equality - the proprety of distributing economic prosperity uniformly among the members of society Tradeoff - to achieve greater equality, could redistribute income from wealthy to porr. But this reduces incentive to work -party or study? -save money or spend it? 2. The cost of something is what you give up to get it -making decisions requires comparing the costs and benefits of alternative choices opportunity cost - what must be given up to obtain some item 3. Rational people think at the margin -make decisions by evaluating costs and benefits of marginal changes - incremental adjustments to an existing plan rational people - people who systematically and purposefully do the best they can to achieve their objectives marginal changes - small incremental adjustments to a plan of action 4. People respond to incentives incentive - something that induces a person to act
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Micro 1 - Chapter 1 Ten Principles of Economics 1. People...

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