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1、Chapter1/TenPrinciplesofEconomicsF13Chapter11TenPrinciplesofEconomicsTENPRINCIPLESOFECONOMICSWHAT’SNEW:ThediscussionsofPrinciple#4,“Peoplerespondtoincentives,”Principle#7,“Governmentscansometimesimprovemarketoutcomes,”andPrinciple#10,“Societyfacesashort-runtra
2、deoffbetweeninflationandunemployment”havebeenshortened.Adefinitionfortheterm“businesscycle”hasbeenadded.AnewFYIboxon“HowtoReadThisBook”hasbeenaddedandprovidesstudentswithtipsonstudying.LEARNINGOBJECTIVES:Bytheendofthischapter,studentsshouldunderstand:Øthatecon
3、omicsisabouttheallocationofscarceresources.Øthatindividualsfacetradeoffs.Øthemeaningofopportunitycost.Øhowtousemarginalreasoningwhenmakingdecisions.Øhowincentivesaffectpeople’sbehavior.Øwhytradeamongpeopleornationscanbegoodforeveryone.Øwhymarketsareagood,butno
4、tperfect,waytoallocateresources.Øwhatdeterminessometrendsintheoveralleconomy.CONTEXTANDPURPOSE:Chapter1isthefirstchapterinathree-chaptersectionthatservesastheintroductiontothetext.Chapter1introducestenfundamentalprinciplesonwhichthestudyofeconomicsisbased.Inab
5、roadsense,therestofthetextisanelaborationonthesetenprinciples.Chapter2willdevelophoweconomistsapproachproblemswhileChapter3willexplainhowindividualsandcountriesgainfromtrade.ThepurposeofChapter1istolayoutteneconomicprinciplesthatwillserveasbuildingblocksforthe
6、restofthetext.Thetenprinciplescanbegroupedintothreecategories:howpeoplemakedecisions,howpeopleinteract,andhowtheeconomyworksasawhole.Throughoutthetext,referencesChapter1/TenPrinciplesofEconomicsF13willbemaderepeatedlytothesetenprinciples.KEYPOINTS:1.Thefundame
7、ntallessonsaboutindividualdecisionmakingarethatpeoplefacetradeoffsamongalternativegoals,thatthecostofanyactionismeasuredintermsofforgoneopportunities,thatrationalpeoplemakedecisionsbycomparingmarginalcostsandmarginalbenefits,andthatpeoplechangetheirbehaviorinr
8、esponsetotheincentivestheyface.2.Thefundamentallessonsaboutinteractionsamongpeoplearethattradecanbemutuallybeneficial,thatmarketsareusuallyagoodwayofcoordinatingtradesamongpeople,a
