BA 3340 Lecture Notes - Lecture 48: Price Floor, Longrun, Marginal Product
Document Summary
The origin and meaning of the word economy". The word economy comes from the greek word for one who manages a household"m further more, economics is the study of how society manages its scarce recourses; individual behaviour, interaction and society as a wholem. Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have the limited nature of society"s resources. In order to obtain one thing you need to renounce something else. Lesson 2: the cost of something is what you give to get it. Lesson 3: rational people think at the margin. Economic agents compare the opportunity cost and benefit to different actions by evaluating there marginal effectm. Marginal change a small incremental adjustment to a plan of actionm. Because people make decisions by comparing costs and benefits, they respond to incentivesm. Lesson 5: trade can make everyone better off.
