ECON 0100 Study Guide - Midterm Guide: Demand Curve, Economic Equilibrium, Opportunity Cost
Document Summary
Chapter 1: ten principles of economics: principle 1 people face tradeoffs. Efficiency vs. equality: efficiency: when society gets the most from its scarce resources, equality: when property is distributed uniformly among society"s members, principle 2 the cost of something is what you give up to get it. Opportunity cost: of any item is whatever must be given up to obtain it. The price of something is what you have to give up. Implicit vs. explicit costs: principle 3 rational people thing at the margin. Systematically and purposefully do the best they can to achieve their objectives. Make decisions by evaluating costs and benefits of marginal changes: incremental adjustments to an existing plan: principle 4 people respond to incentives. Incentive: something that induces a person to act, i. e. the prospect of a reward or punishment. Ex: course grades, seat belts/ air bags, tax laws, unemployment benefits & unemployment rate, crime punishment (jail environment, principle 5 trade can make everyone better off.
