Unit 1 Ten_Principles

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1、1TenPrinciplesofEconomicsTENPRINCIPLESOFECONOMICSAhouseholdandaneconomyfacemanydecisions:Whowillwork?Whatgoodsandhowmanyofthemshouldbeproduced?Whatresourcesshouldbeusedinproduction?Atwhatpriceshouldthegoodsbesold?TENPRINCIPLESOFECONOMICSSocietyandScarceResources:Themanagementofsociety’sresource

2、sisimportantbecauseresourcesarescarce.Scarcity...meansthatsocietyhaslimitedresourcesandthereforecannotproduceallthegoodsandservicespeoplewishtohave.TENPRINCIPLESOFECONOMICSEconomicsisthestudyofhowsocietymanagesitsscarceresources.TENPRINCIPLESOFECONOMICSHowpeoplemakedecisions.Peoplefacetradeoffs.

3、Thecostofsomethingiswhatyougiveuptogetit.Rationalpeoplethinkatthemargin.Peoplerespondtoincentives.TENPRINCIPLESOFECONOMICSHowpeopleinteractwitheachother.Tradecanmakeeveryonebetteroff.Marketsareusuallyagoodwaytoorganizeeconomicactivity.Governmentscansometimesimproveeconomicoutcomes.TENPRINCIPLESO

4、FECONOMICSTheforcesandtrendsthataffecthowtheeconomyasawholeworks.Thestandardoflivingdependsonacountry’sproduction.Pricesrisewhenthegovernmentprintstoomuchmoney.Societyfacesashort-runtradeoffbetweeninflationandunemployment.Principle#1:PeopleFaceTradeoffs.“Thereisnosuchthingasafreelunch!”Makingdec

5、isionsrequirestradingoffonegoalagainstanother.Principle#1:PeopleFaceTradeoffs.Togetonething,weusuallyhavetogiveupanotherthing.Gunsv.butterFoodv.clothingLeisuretimev.workEfficiencyv.equityPrinciple#1:PeopleFaceTradeoffsEfficiencyv.EquityEfficiencymeanssocietygetsthemostthatitcanfromitsscarcereso

6、urces.Equitymeansthebenefitsofthoseresourcesaredistributedfairlyamongthemembersofsociety.Principle#2:TheCostofSomethingIsWhatYouGiveUptoGetIt.Decisionsrequirecomparingcostsandbenefitsofalternatives.Whethertogotocollegeortowork?Whethertostudyorgooutonadate?Whethertogotoclassorsleepin?Theopportuni

7、tycostofanitemiswhatyougiveuptoobtainthatitem.Principle#2:TheCostofSomethingIsWhatYouGiveUptoGetIt.LALakerbasketballstarKobeBryantchosetoskipcollegeandgostraightfromhighschooltotheproswherehehasearnedmillionsofdollars.People