BU111 Final: EC120-Fall-Term-Notes
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BU111 Full Course Notes
Verified Note
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Document Summary
Economics: the study of how society manages its scarce resources is important because resources are scarce. Three groups: (foundation of econ: how people make decision principles (1-4, how people interact (5-7, how the economy works as a whole (8-10) Principle #1: people face tradeoffs: 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, example: cost of going to college. Principle #3: rational people think at the margin: rational people: ppl who systematically and purposefully do the best they can to achieve their objectives, marginal changes: small incremental adjustments to a plan of action. Principle #4: people respond to incentives: incentive: something that encourages a person to act.
