Last Modified: 2012-02-06
1. Resources are scarce.
2. The real cost of something is what you must give up to get it.
3. “How much?” is a decision at the margin.
4. People usually take advantage of opportunities to make themselves better off.
- anything that can be used to produce something
- are scare: quantity available isn't large enough to satisfy all productive uses
1. There are gains from trade.
2. Markets move toward equilibrium.
3. Resources should be used as efficiently as possible to achieve society’s goals.
4. Markets usually lead to efficiency.
5. When markets don’tachieve efficiency, government intervention can improve society’s welfare.
- Indiv actions have side effects nottaken into account: externalities
- One party prevents mutuallybeneficial trades from occurring in attempt to capture greater share ofresources for itself
- Some goods cannot be efficiently managed by markets
1. One person’s spending is another person’s income.
2. Overall spending sometimes gets out of line with the economy’s productive capacity.
3. Government policies can change spending.
Thereare two main reasons economists disagree:
Whichsimplifications to make in a model
the demand curve is __________ sloping
the demand curve is downward sloping
A movement along the demand curve is a change in...
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