ECO 2210 Chapter Notes - Chapter 1: Invisible Hand, Richard Cantillon, Market Power
15 Sep 2016
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Document Summary
An economy is just a group of people dealing with one another. The behavior of an economy reflects the behavior of the the individuals who make up the economy. Making decisions requires trading off one goal against another. Society faces a trade-off between efficiency and equality. Efficiency the property of society getting the most it can from its scarce resources. Equality the property of distributing economic prosperity uniformly among the members of society (efficiency is the size of the economic pie and equality is how the pie is divided into individual slices) 1-1b the cost of something is what you give up to get it. Making decisions requires comparing the costs and benefits of alternative courses of action. Opportunity cost whatever must be given up to obtain some item. Rational people people who systematically and purposefully do the best they can to achieve their objectives. Marginal change a small incremental adjustment to a plan of action.
