EC120 Lecture Notes - Lecture 1: Business Cycle, Invisible Hand, Market Economy
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EC120 Full Course Notes
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Document Summary
Economics: the study of how society manages its scarce resources. The management of society"s resources is important because resources are scarce. How the economy as a whole works (principles 8-10) There is no such thing as a free lunch . Efficiency: the property of society getting the most it can from its scarce resources. Equity: the property of distributing economic prosperity fairly among the members of society. Principle #2: the cost of something is what you give up to get it. Opportunity cost: whatever must be given up to obtain some item. Prinicple #3: rational people think at the margin. 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. Incentive: something that induces a person to act. Principle #5: trade can make everyone better of. Principle #6: markets are usually a good way to organize economic activity.
