i i e r u r i r r
n i v
a r u r n i n c r s r s
Economics study of administration of scarce resources
L oikonomos who hosehold
manages a
L allocation of resources people money
scarcity limited nature of resources in society
CHOICES
to PRINCIPLES of Economics
1 Individual decision making
a People face trade offs
to chose give smthg up trade off of goats
Ex student time allocation
If
tEfzEA
EE e9tYuI.e
coronata efficiency
efficiency vs equality size
max benefit equal distribution of benefit
of scarce resources of scarce resources
Ex redistribution of rich income to poor
L 9 equality toefficiency
L d reward for work less work less prod
L dividing pie in equal sites reduces the pie
Efficiency in production ProductionPossibilityFrontier
T prod of X T prod et g
Bc can't a prod et x without t
y
T
j efficient max prod using all resources
not
efficient reallocation of resources efficient when prod of
one A without d others
efficient reallocation if not possible to 9 efficiency reallocating
, Efficiency in consumption
T efficiency in reallocation when welfare of one 4 without f
welfare of others
Pareto efficiency State of reallocation of resources where its impossible
to make an individual better off without worsening the rest
over us ends oeau
LTEIIIent edfea
t't as one'swelfare1
not efficient
2 cost of smiles is what you give up to get it
decision making comparing cost benefits
1
opportunity cost
what you give up to set smths
Op Cost I Ci
l
Ir Cr
1
income cost
f short term then lens term
3 Rational people think at the margin it
is
rational people make decisions comparing marginal benefit
marginal cost
marginal change small incremental adjustment to a plan
of action
marginal cost increase or decrease in production Cest if
output is increased 6g one more unit
MC AT c cost
D Q quantity
why water cheap
is diamods expensive
water g
L
L
necessary but plentiful
diamonds rare
I why buying marginal benefit then 1 extra unit yields
also depends on alreadyexistin
units
n i v
a r u r n i n c r s r s
Economics study of administration of scarce resources
L oikonomos who hosehold
manages a
L allocation of resources people money
scarcity limited nature of resources in society
CHOICES
to PRINCIPLES of Economics
1 Individual decision making
a People face trade offs
to chose give smthg up trade off of goats
Ex student time allocation
If
tEfzEA
EE e9tYuI.e
coronata efficiency
efficiency vs equality size
max benefit equal distribution of benefit
of scarce resources of scarce resources
Ex redistribution of rich income to poor
L 9 equality toefficiency
L d reward for work less work less prod
L dividing pie in equal sites reduces the pie
Efficiency in production ProductionPossibilityFrontier
T prod of X T prod et g
Bc can't a prod et x without t
y
T
j efficient max prod using all resources
not
efficient reallocation of resources efficient when prod of
one A without d others
efficient reallocation if not possible to 9 efficiency reallocating
, Efficiency in consumption
T efficiency in reallocation when welfare of one 4 without f
welfare of others
Pareto efficiency State of reallocation of resources where its impossible
to make an individual better off without worsening the rest
over us ends oeau
LTEIIIent edfea
t't as one'swelfare1
not efficient
2 cost of smiles is what you give up to get it
decision making comparing cost benefits
1
opportunity cost
what you give up to set smths
Op Cost I Ci
l
Ir Cr
1
income cost
f short term then lens term
3 Rational people think at the margin it
is
rational people make decisions comparing marginal benefit
marginal cost
marginal change small incremental adjustment to a plan
of action
marginal cost increase or decrease in production Cest if
output is increased 6g one more unit
MC AT c cost
D Q quantity
why water cheap
is diamods expensive
water g
L
L
necessary but plentiful
diamonds rare
I why buying marginal benefit then 1 extra unit yields
also depends on alreadyexistin
units
