Mankiw s principles of microeconomics 2nd ed
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Mankiw s principles of microeconomics 2nd ed
UPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed ges itsscarce resourcesit must also allocate the output of goods and services that they produce. It must decide who will eat caviar and who will eat potatoes. It must decide who will drive a Porsche and who will take the bus.The management of society's resources is important because resources are sc Mankiw s principles of microeconomics 2nd ed arce. Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Just as a househoMankiw s principles of microeconomics 2nd ed
ld cannot give every member everything he or she wants, a society cannot give ever}' individual the highest standard of living to which he or she mighUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed r but through the combined actions of millions of households and firms. Economists therefore study how people make decisions: how much they work, what they buy, how much they save, and how they invest their savings. Economists also study how people interact with one another. For instance, they exami Mankiw s principles of microeconomics 2nd ed ne how the multitude of buyers and sellers of a good together determine the price at which the good is sold and the quantity that is sold. Finally, ecMankiw s principles of microeconomics 2nd ed
onomists analyze forces and trends that affect the economy as a whole, including the growth in average income, the fraction of the population that canUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed . In the rest of this chapter, we look at Ten Principles of Economics. These principles recur throughout this book and are introduced here to give you an overview of what economics is all about. You can think of this chapter as a "preview of coming attractions."HOW PEOPLE MAKE DECISIONSThere is no m Mankiw s principles of microeconomics 2nd ed ystery to what an "economy" is. Whether we are talking about the economy of Los Angeles, of the United States, or of the whole world, an economy is juMankiw s principles of microeconomics 2nd ed
st a group of people interacting with one another as they go about their lives. Because the behavior of an economy reflects the behavior of the indiviUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed e first lesson about making decisions is summarized in the adage: "There is no such thing as a free lunch." To get one thing that we like, we usually have to give up another thing that we like. Making decisions requires trading off one goal against another.Consider a student who must decide how to a Mankiw s principles of microeconomics 2nd ed llocate her most valuable resource—her time. She can spend all of her time studying economics; she can spend all of her time studying psychology; or sMankiw s principles of microeconomics 2nd ed
he can divide her time between the two fields. For every hour she studies one subject, she gives up an hour she could have used studying the other. AnUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed ob for some extra spending money.CHAPTER 1 TEN PRINCIPLES OF ECONOMICS 5Or consider parents deciding how to spend their family income. They can buy food, clothing, or a family vacation. Or they can save some of the family income for retirement or the children's college education. When they choose to Mankiw s principles of microeconomics 2nd ed spend an extra dollar on one of these goods, they have one less dollar to spend on some other good.When people are grouped into societies, they faceMankiw s principles of microeconomics 2nd ed
different kinds of tradeoffs. The classic tradeoff is between "guns and butter." The more we spend on national defense to protect our shores from foreUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed he tradeoff between a clean environment and a high level of income. Laws that require firms to reduce pollution raise the cost of producing goods and services. Because of the higher costs, these firms end up earning smaller profits, paying lower wages, charging higher prices, or some combination of Mankiw s principles of microeconomics 2nd ed these three. Thus, while pollution regulations give US the benefit of a cleaner environment and the improved health that comes with it, they have theMankiw s principles of microeconomics 2nd ed
cost of reducing the incomes of the firms' owners, workers, and customers.Another tradeoff society faces is between efficiency and equity. Efficiency UPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed g society's members. In other words, efficiency refers to the size of the economic pie, and equity refers to how the pie Is divided. Often, when government policies are being designed, these two goals conflict.Consider, for instance, policies aimed at achieving a more equal distribution of economic Mankiw s principles of microeconomics 2nd ed well-being. Some of these policies, such as the welfare system or unemployment insurance, try to help those members of society who are most in need. OMankiw s principles of microeconomics 2nd ed
thers, such as the individual Income tax, ask the financially successful to contribute more than others to support the government. Although these poliUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed rich to the poor, it reduces the reward for working hard; as a result, people work less and produce fewer goods and services. In other words, when the government tries to ait the economic pie Into more equal slices, the pie gets smaller.Recognizing that people face tradeoffs does not by itself tell Mankiw s principles of microeconomics 2nd ed US what decisions they will or should make. A student should not abandon the study of psychology just because doing so would increase the time availabMankiw s principles of microeconomics 2nd ed
le for the study of economics. Society should not stop protecting the environment just because environmental regulations reduce our material standard UPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed because people are likely to make good decisions only if they understand the options that they have available.PRINCIPLE #2: THE COST OF SOMETHING ISWHAT YOU GIVE UP TO GET ITBecause people face tradeoffs, making decisions requires comparing the costs and benefits of alternative courses of action. I Mankiw s principles of microeconomics 2nd ed n many cases, however, the cost of some action is not as obvious as it might first appear.Consider, for example, the decision whether to go to collegeMankiw s principles of microeconomics 2nd ed
. The benefit is intellectual enrichment and a lifetime of better job opportunities. But what is the cost? To answer this question, you might be temptUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society manag Mankiw s principles of microeconomics 2nd ed c prosperity fairly among the members of societyhttps://khothuvien.cori!6 PART ONE INTRODUCTIONopportunity costUPRINCIPLES OFJlifflBsIM. GREGORY MANKIW4 PART ONE INTRODUCTIONscarcitythe limited nature of society'sresourceseconomicsthe study of how society managGọi ngay
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