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Chapter 1: The Nature and Method of Economics

Econ 10LS
Jan. 25th 2006
What is Economics?
Economics:
Social science concerned with the efficient use of scarce resources to achieve the maximum satisfaction of economic wants

Economic perspective
Economic way of thinking
Economic Perspective
Three elements
Scarcity (limited) and Choice
Opportunity cost

Rational Behavior
Individuals look for and pursue opportunities to increase UTILITY.

Marginalism: Benefits and Cost
Decision makers must compare two different options.
Example: shopping for engagement rings.

Can there be too much?
Yes,

This happens when Marginal Costs exceeds Marginal Benefits.

When this happens we sacrifice alternative goods and services that are more valuable.

Why Study Economics
Adam Smith
David Ricardo
John Stuart Mill
Karl Marx
John Maynard Keynes

Helps government leaders to decide on monetary policies.
Unemployment, inflation, economic growth, taxation, poverty,......

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Approximate Word Count: 544
Approximate Pages: 3 (250 words per double-spaced page)

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