Mostly summarized from Gregory Mankiw’s Principles of Economics, 5th Ed.
PART 1 Introduction
Chapter 1 of 36 Ten Principles of Economics
Section 2 of 14
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A society must find a way to decide what jobs will be done and who will do them.
It needs some people to grow food, other people to make clothing, and others to design computer software.
Once society has allocated people, as well as land, buildings, and machines to various jobs it must also allocate the output of goods (and services) they produce.
It must decide who will eat caviar and who will eat potatoes.
It must decide who will drive a Ferrari and who will ride the bus.
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Because resources are scarce the management of society's resources is important.
Scarcity means society has limited resources and cannot produce all the goods people want.
Just as each member of a household cannot get everything they want each individual in a society cannot attain the highest standard of living.
We will see the higher the productivity of person (the higher total value produced) the higher the income and the higher the standard of living.
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Economics is the study of how society manages its scarce resources.
Resources are allocated through the actions of millions of households and firms.
Economists study how people interact with one another.
They study how people make decisions, including how much they work, what they buy, how much they save, and how they invest their savings.
Economists examine how the multitude of buyers and sellers of a good determine the price at which the good is sold and the quantity sold.
They analyze forces and trends that affect the economy as a whole, including the growth in average income, the fraction of the population that cannot find work, and the rate at which prices are rising.
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Here are Ten Principles of Economics:
1: people face trade-offs
2: the cost of something is what you give up to get it
3: rational people think at the margin
4: people respond to incentives
5: trade can make everyone better off
6: markets are usually a good way to organize economic activity
7: governments can sometimes improve market outcomes
8: a country's standard of living depends on its ability to produce goods and services
9: prices rise when the government issues too much money
10: society faces a short-run trade-off between inflation and unemployment
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people respond to incentives
hitobito wa insentibu ni han'nō shimasu
人々はインセンティブに応答します
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