Learning unit 1
Principle of economics 
Principle 1 : People face trade-offs
Principle 2 : The cost of something is what you give up to get it
Principle 3 : Rational people think at the margin
Principle 4 : People respond to incentives
Principle 5 : Trade can make everyone better off
Principle 6 : Markets are usually a good way to organize economic activity.
Principle 7 : Governments can sometimes improve market outcomes
Principle 8 : A country's standard of living depends on its ability to produce goods and services
Principle 9 : Prices rise when the government prints too much money
Principle 10 : Society faces a short-run trade-off between inflation and unemployment
To get one thing, we usually have to give up another thing
opportunity cost = an item is what you give up to obtain that item 💰 💰 💰
People make decisions by comparing cost and benefit at the margin
Marginal changes in costs or benefit motivate people to respond
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People gain from their ability to trade with one another ♻ ♻
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🚩ADAM SMITH. 'INVISIBLE HAND'
⚠ A market economy is an economy that allocates resource through the decentralized decisions of many firm and household as they interact in market for good and services
Market work
Property right are enforced
✅the ability of an individual to own and exercise control over a scarce resource
Market failure
✅occurs when the market fails to allocate resource efficiently
❎when market fails government can intervene to promote efficiency and equity.
Standard of living may measured ⭐by comparing personal incomes AND ⭐by comparing the total market value of a nation's production
inflation
fluctuations in economic activity, such as employment and production
increase in the overall level of prices in the economy
Economic models
the circular flow diagram
the production possibilites frontier
Firms
⛔Produce and sell goods and services
⛔Hire and use factors of production
Households
Buy and consume goods and services 🔥
own and sell factors of production 🔥
markets for goods and services
❤Firms sell
❤household buy
Markets for factors of production
❌:Households sell
❌firms buy
The concepts illustrated by the production possibilities frontier
😃efficiency
😃trade-offs
😃opportunity cost
😃economic growth