[ECO1102] - Midterm Exam Guide - Everything you need to know! (13 pages long)
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ECO 1102 Full Course Notes
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Document Summary
The word economy comes from the greek word for (cid:862)o(cid:374)e (cid:449)ho (cid:373)a(cid:374)ages a household. (cid:863) Economics: the study of how society manages its scarce the limited nature of resources. The management of so(cid:272)iet(cid:455)"s resour(cid:272)es (cid:894)e. g. , people, la(cid:374)d, (cid:271)uildi(cid:374)gs, (cid:373)a(cid:272)hi(cid:374)er(cid:455)(cid:895) is i(cid:373)porta(cid:374)t because resources are scarce. Scarcity: the li(cid:373)ited (cid:374)ature of so(cid:272)iet(cid:455)"s resour(cid:272)es. Principle #1: people face tradeoffs (cid:862)there ai(cid:374)"t (cid:374)o su(cid:272)h thi(cid:374)g as a free lu(cid:374)(cid:272)h. (cid:863: efficiency: the property of society getting the maximum benefits from its scarce resources. For example, for workers to be as productive as possible (b/c time and wage constraints such as max. The explicit cost (direct and obvious): fees, books, etc. The implicit cost (indirect): your time and energy. Does the marginal cost outweigh the marginal benefit: rational agents: make decisions by comparing marginal benefits with marginal costs, because they maximize the value of their options. Principle #4: people respond to incentives: i(cid:374)(cid:272)e(cid:374)ti(cid:448)e: o(cid:373)ethi(cid:374)g that induces a person to act.