Professional Documents
Culture Documents
Economics
Chapter 1
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Economics
Economics is the study of how
society manages its scarce
resources.
or
the study of how society meets its
unlimited wants and needs with
its limited resources.
How People Make Decisions
1. People face tradeoffs.
“There is no such thing
as a free lunch!”
2. The cost of something is what
you give up to get it.
LA Laker basketball
star Kobe Bryant
chose to skip college
and go straight to the
NBA from high school
when offered a $10
million contract.
How People Interact
5. Trade can make everyone
better off.
Trade allows people to specialize in
what they do best.
Trade increases the variety of goods
and services available.
Trade lowers costs for consumers
6. Markets are usually a good way
to organize economic activity.
In a market economy, households freely
decide what to buy and who to work for and
firms freely decide who to hire and what to
produce.