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Resources are limited. We cannot produce/consume all the goods and services we wish to have
Choices must be made when allocating society’s scarce resource
The study of how society manages its scarce resource
Getting the max benefit from scarce resources.
When benefits are traded uniformly among society's members.
To achieve greater equality, could redistribute income from wealthy to poor. But this reduces incentive to work and produce, shrinks the size of the economic “pie.”
What you must give up to obtain it.
The benefit from an additional unit of a good.
The cost of obtaining an additional unit of good.
A group of buyers and sellers.
Decisions are made by many buyers and many sellers, not by a centralized entity.
When a market fails to allocate an economy's resources effeciently.
When the production or consumption of a good affects bystanders. i.e. pollution.
When a single buyer or seller has substantial influence on market price. i.e. monopoly.
Chapter 1: Ten Principles of Economics