ECON 2023 Chapter 1: Chap 1
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25 Aug 2016
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Scarcity - the limited nature of society"s resource (air, oxygen, water, etc. ) Economics - the study of how society manages its scarce resource. How much to work, save, and spend. How firms decide how much to produce, How society decides how to divide its resources between national defense, consumer goods, protecting the environment, and other needs. Size of the pie vs. how it"s divided up. Efficiency: when society gets the most from its scarce resources. Ex: when a man spend all his money to buy all the cars, and that leads the other people ride bicycle. Equality: when prosperity is distributed uniformly among society"s members. Tradeoff: to achieve greater equality, could redistribute income from wealthy to poor. But this reduces incentive to work and produce, shrinks the size of the economic pie. The cost of something is what you give up to get it (p. 5) Making decisions requires comparing the costs and benefits of alternative choices.
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