MAE101 : MAE101 Summary Notes
31 Jul 2015
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How the economy as a whole works: people face trade-offs (eg. Guns or butter, efficiency or equity: the cost of something is what you give up to get it (eg. Opportunity cost of whether to go to uni: rational people think at the margin (eg. Compare marginal benefits and marginal costs: people respond to incentives (eg. Tax on petrol encourages people to drive more efficient cars: trade can make everyone better off (eg. Specialisation through trade: markets are usually a good way to organize economic activity (eg. Invisible hand guides desirable market outcomes: governments can sometimes improve market outcomes (eg. Market failure, externality, market power: a country"s standard of living depends on productivity, prices rise when the government prints too much money, society faces a short-term trade-off between inflation and unemployment (eg. Chapter 3: absolute advantage: producer that requires less inputs to produce, comparative advantage: comparison between competitors of opportunity cost.
