ECON 200 Study Guide - Comprehensive Final Exam Guide - Inflation, Gross Domestic Product, Opportunity Cost
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ECON 200 Full Course Notes
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Document Summary
Word economy comes from greek word oikonomos meaning one who manages a household . Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Economics is the study of how society manages its scarce resources. Four principles about individual decision making 1. trade-offs 2. cost of something is what you give up to get it 3. rational people think at the margin 4. people respond to incentives. Making decisions requires trading off one goal against another. Trade-off society faces is between efficiency and equality, two goals often conflict. Efficiency means that society is getting the maximum benefits from its scarce resources. Equality means that those benefits are distributed uniformly among society"s members. Opportunity cost of an item is what you give up to get that item. Rational people systematically and purposefully do the best they can to achieve their objectives, given the available opportunities.
