Notes on Principles of Economics
Book: Principles of Economics (N. Gregory Mankiw) http://admin.wadsworth.com/resource_uploads/static_resources/0324168624/8413/Mankiw_TenPrinciple_Videos.html Introduction
economy: Greek: the one who manages the household scarcity: the limited nature of society`s resources economics: the study of how society manages it´s scarce resources economy: a group of people interacting with one another as they go about their lives
important: management of society´s resources; resources are scare most societies, resources are allocated not by a single household, but through the combined action of millions of households and firms
( Economist: study how people make decisions: how much they must work; what they buy; how much they save; how they invest their savings, how people interact with each other; also analyze forces and trends that effect the economy as a whole, including the growth in average income and the rate at which prices are rising;
Ten Principles of Economics:
How people make decisions:
#1 People face tradeoffs
“There is no such thing as a free lunch.” To get one desired thing, usually required giving up another desired thing: making decisions ( trading off one goal against another
e.g: How I spend my money (save/invest); The subject I want to study; The job I want to work in; The meal I am going to have; The place where I want to live or to study abroad …
classical tradeoffs:
“guns & butter”; (e.g. reducing pollution vs. low wages and high producing costs)
“efficiency & equity” : conflicts when government policies are being designed
efficiency: the property of society getting the most it can from it`s scarce sources (size of economic pie) equity: the property of distributing economic prosperity fairly among the members of society (how the pie is divided)
#2 The cost of something is what you give up to get it because people face tradeoffs, making decisions requires comparing the costs and benefits of alternative
economy: Greek: the one who manages the household scarcity: the limited nature of society`s resources economics: the study of how society manages it´s scarce resources economy: a group of people interacting with one another as they go about their lives
important: management of society´s resources; resources are scare most societies, resources are allocated not by a single household, but through the combined action of millions of households and firms
( Economist: study how people make decisions: how much they must work; what they buy; how much they save; how they invest their savings, how people interact with each other; also analyze forces and trends that effect the economy as a whole, including the growth in average income and the rate at which prices are rising;
Ten Principles of Economics:
How people make decisions:
#1 People face tradeoffs
“There is no such thing as a free lunch.” To get one desired thing, usually required giving up another desired thing: making decisions ( trading off one goal against another
e.g: How I spend my money (save/invest); The subject I want to study; The job I want to work in; The meal I am going to have; The place where I want to live or to study abroad …
classical tradeoffs:
“guns & butter”; (e.g. reducing pollution vs. low wages and high producing costs)
“efficiency & equity” : conflicts when government policies are being designed
efficiency: the property of society getting the most it can from it`s scarce sources (size of economic pie) equity: the property of distributing economic prosperity fairly among the members of society (how the pie is divided)
#2 The cost of something is what you give up to get it because people face tradeoffs, making decisions requires comparing the costs and benefits of alternative