Principles of Economics: A Comprehensive Guide
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Principles of Economics
Scarcity and Economics
Scarcity refers to the limited nature of society's resources. Economics is the study of how society manages its scarce resources.
How People Make Decisions
1. People Face Tradeoffs
Every decision involves tradeoffs. A significant tradeoff society faces is between:
- Efficiency: When society gets the most from its scarce resources.
- Equality: When prosperity is distributed uniformly among society's members.
Tradeoff Example: To achieve greater equality, income could be redistributed from the wealthy to the poor. However, this can reduce the incentive to work and produce, shrinking the overall economy.
2. The Cost of Something Is What You Give Up to Get It
Decision-making requires comparing the costs and benefits... Continue reading "Principles of Economics: A Comprehensive Guide" »