Chapter 1 Ten Principles of Economics Pt.1
Chapter 1 Ten Principles of Economics Pt.1 ECON 201
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This 2 page Class Notes was uploaded by Lori Richardson on Sunday September 13, 2015. The Class Notes belongs to ECON 201 at Louisiana Tech University taught by Hung Nguyen in Fall 2015. Since its upload, it has received 333 views. For similar materials see Economic Principles and Problems in Economcs at Louisiana Tech University.
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Date Created: 09/13/15
Chapter 1 Ten Principles of Economics Economics study of how society individuals and rms manages and directs scarce resources Economists study the managing and directing of scarce resources study how people make decisions for example how people respond to supply and demand invest saving etc Ten Principles of Economics 1 People face tradeoffs wants and needs 0 To get something we likewant we might have to give up something else we also likewant Ex 39guns and butter should your money go to national defense or consumer goodsservices 2 39Ef ciency and equality Ef ciency being the gov t using tax dollars to aid the poor The result Effort and out put from tax payers will decrease o The m Of Something Is What You Give Up To Get It Decision makers need to think of the costs and bene ts of alternative courses of action Ex After high school you will need to decide if you want to attend college or work Consider bene ts and repercussions of each Opportunity Cost the loss of potential gain from other alternatives when one alternative is chosen 3 Rational people think at the margin 0 We assume that people are rational Choosing great over average Margin means edge o A rational decision maker takes an action iff the marginal bene ts MB gt marginal cost MC Ex Cell phone costs MB of 10 min talk on your phone 7 Monthly costs 4005 per min Usage is 100 min Total cost TC 90 Fixed cost 4005100 min variable cost Monthly avg cost AC per min 09 90100 min Non rational thinker would pay 9 vs 7 MC 2
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