Chap001.1 - usually means having less of another. z Because...

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1 Thinking Like An Economist Chapter 1: Thinking Like an Economist Slide 2 Economics ± Economics z The study of how people make choices under conditions of scarcity and of the results of those choices for society. Chapter 1: Thinking Like an Economist Slide 3 Micro and Macro ± Microeconomics z The study of individual choice under scarcity and its implications for the behavior of prices and quantities in individual markets. ± Macroeconomics z The study of the performance of national economies, and of the policies that governments use to try to improve that performance. Chapter 1: Thinking Like an Economist Slide 4 Choice In a World of Scarcity ± The Scarcity Principle z Boundless wants cannot be satisfied with limited resources. z Therefore, having more of one thing
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Unformatted text preview: usually means having less of another. z Because of scarcity we must make choices. Chapter 1: Thinking Like an Economist Slide 5 Choice In a World of Scarcity The Cost-Benefit Principle z An individual (or a firm or a society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs. Chapter 1: Thinking Like an Economist Slide 6 Choice In a World of Scarcity Choosing the Optimal Class Size z Assume that the cost of a class with 20 students is $1,000 per student more than a class of 100 students z Should the class size be reduced to 20 students? z Why are honors classes smaller?...
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.

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