Econ Chapter 1

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misol
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265082
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Econ Chapter 1
Updated:
2014-03-04 19:36:02
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econ chapter
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econ chapter one
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  1. Economics
    The study of how society manages its limited resources to satisfy unlimited wants and needs 

    (the study of how society manages its scarce resources
  2. Principle # 1
    People face trade-offs, there is no such thing as free lunch
  3. Principle # 2
    The cost of something is what you give up to get it
  4. Principle # 3
    Rational Decision Maker's take action only if marginal benefits of the action exceed marginal costs of the action
  5. Principle # 5
    Trade between 2 entities benefits everyone
  6. The market is guided by
    • Self Interest
    • Adam Smith and the Invisible Hand (helps determine what to produce according to buyers, how to produce firms/sellers to maximize $, and who receives it if you can afford the cost)
  7. Market Power
    ability company has over industry by being able to manipulate price via influencing supply/demand or both (change slice of pie or how its divided)

    have anti monopolization and anti trust laws
  8. Market Failure
    situation in which the market on its own fails to achieve societies goals or allocates resources effeciently
  9. Productivity
    • amount of the product produced from each worker's time
    • P = p/l  (production/labor force)
  10. Decrease in growth rate of money (inflation)will be accompanied by increase int he unemployment
    Society faces short term trade off between inflation rate and unemployment 

    Phillips Curve (price level on y and unemployment on x)

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