4 MAIN ISSUES

1. Basic concept
2. 10 principles (7 principles)
3. PPF model
4. Circular flow model

I. Basic concept
*why household = economy
make 2 important decision: allocate jobs & outputs
eg: allocate jobs : who will cook, who will do sth
allocate outputs : who will have desert….
*Scarcity :( sự khan hiếm) limited nature of society’ resources
eg: -24 hours (limited amount of time) , you have many things want to
do but u only have 24hs so u just can do some things.
-rice : cheap => we can produce, air: no price=> everywhere
-mercides benz, vila,cobe beef… high price => scarcity
**market price identify the scarcity =>Scarcity demonstrates the maket
price
II. 10 principles
*Principle 1: pps face trade-offs ( đánh đổi)

● Making decisions
– Trade off one goal against another
– Student – time ( đi học đánh đổi tg để đi ngủ hoặc làm vc khác)
– Parents – income
● Society
• National defense vs. consumer goods
• Clean environment vs. high level of income
• Efficiency vs. equality
● Efficiency
– Society - maximum benefits from its scarce resources
– Size of the economic pie
● Equality (how to achieve the goals in most effective way)
– Benefits - uniformly distributed among society’s members
–How the pie is divided into individual slices
Eg:nc đức đánh thuế cao( doanh nghiệp ko muốn làm vc, sản
suất nhiều=> của cải đc chia đều cho cả ng giàu và ng nghèo),
giảm efficency nhg tăng equality
 *PRINCIPLE 2: The cost of something is what you give up to get it
• People face trade-offs
–Make decisions
• Compare cost with benefits of alternatives
–Opportunity cost
• Whatever most be given up to obtain one item
OC of going college :
- time ( indirect cost)
- tuition fee( direct cost)
- house rent (DC)
- text book…(DC)
Eg: Messi don't go to college => OC too high, give up football
career
● There is no free lunch
Eg: L đi ăn vs Đ, đăng bao, nhg L vẫn mất OC( mất tg đi ăn, ko
học , ngày hôm sau trượt môn, mất 3tr)
Principle 3: Rational people think at the margin
• Rational people
–Systematically & purposefully do the best they can to achieve their objectives
• Marginal changes
–Small incremental adjustments to a plan of action
• Rational decision maker – take action only if
–Marginal benefits(lợi ích tăng thêm) > Marginal costs
Eg: 1 more computer

Sl lãi Total cost

1000 5000 2000

1001 5100 2050

MB : $100
MC: $50
=> do
mic small thị trg cụ thể, hÀNH VI NG TIÊU DÙNG
MAC GDP,

positive normative
it is should be

fact opinion

denied data hard to denied

PPF
technology+resousrces

if 1 of 2 increase or decrease => ppf dịch chuyển lên hoặc xuống

PPF bowed outward because the Opportunity cost increase