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This 2 page Reader was uploaded by Michelle Riffitts on Friday January 30, 2015. The Reader belongs to a course at a university taught by a professor in Fall. Since its upload, it has received 108 views.
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I had to miss class because of a doctors appointment and these notes were a LIFESAVER
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Date Created: 01/30/15
Chapter 1 Making choices Individual choicechoices about what to do and what not to do Resources are scarce Limited income Time is limited Resourceanything used to produce something else Land Labor Capitalman made productive assets Human capitaleducation and skills of workers Market economy society s choices come through individual39s choices Opportunity cost the cost of an item what you give up in making one choice over another Opportunity cost of attending collegetuition and housing plus the possible income over four yea rs Decision at the marginhow much decision Trade off compare the cost and bene ts of doing something Marginal analysisstudy of margin decisions Individuals will exploit an opportunity to make themselves better off Incentivesreward for changing behavior lnteraction my choices effect your choices Gains from trade Tradegoods and services divided among population Gains from tradetrading better than trying to be self suf cient Specialization Economy as a whole produces more when people specialize in a task and trade with others Equilibriumindividuals not better off from doing something different Markets move towards equilibrium Resources are used ef ciently when they are used in such a way that has fully exploited all opportunities to make everyone better offsome people better off without making others worse off Equityfair share Incentives built into market economy ensure resources are put to good use Government intervention can improve society when markets are inef cient Individual markets have side effectspollution One person39s spending is another person39s income Spending gets out of line with production Spending too low recession Spending too highin ation
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