目录
Content
Chapter_1
Chapter_2
Chapter_3
Chapter_4
Chapter_5
Chapter_6
Chapter_7
Chapter_8
Chapter_9
Chapter_10
Chapter_11
Chapter_12
Chapter_13
Chapter_14
Chapter_15
Chapter_16
Chapter_17
Chapter_18
Chapter_19
Chapter_20
Chapter_21
Chapter_22
Chapter_23
Chapter_24
Chapter_25
Chapter_26
Chapter_27
Chapter_28
Chapter_29
Chapter_30
Chapter_31
Chapter_32
Chapter_33
Chapter_34
Chapter_35
Chapter_36
Chapter_37
Chapter_38
Chapter_39
Chapter_40
Chapter_41
Chapter_42
Chapter_43
Chapter_44
Chapter_45
Chapter_46
Chapter_47
Chapter_48
Chapter_49
Chapter_50
Chapter_51
Chapter_52
Chapter_53
Chapter_54
Chapter_55
Chapter_56
Chapter_57
Chapter_58
Chapter_59
Chapter_60
Chapter_61
Chapter_62
Chapter_63
Chapter_64
Chapter_65
Chapter_66
Chapter_67
Chapter_68
Chapter_69
Chapter_70
Chapter_71
Chapter_72
Chapter_73
Chapter_1
IN THIS CHAPTER
YOU WILL . . .
Discuss how
incentives af fect
people’s behavior
Learn the meaning of
oppor tunity cost
Learn that
economics is about
the allocation of
scarce resources
Examine some of the
tradeof fs that people
face
See how to use
marginal reasoning
when making
decisions
The word economy comes from the Greek word for “one who manages a household.”
At first, this origin might seem peculiar. But, in fact, households and
economies have much in common.
A household faces many decisions. It must decide which members of the
household do which tasks and what each member gets in return: Who cooks dinner?
Who does the laundry? Who gets the extra dessert at dinner? Who gets to
choose what TV show to watch? In short, the household must allocate its scarce resources
among its various members, taking into account each member’s abilities,
efforts, and desires.
Like a household, a society faces many decisions. A society must decide what
jobs will be done and who will do them. It needs some people to grow food, other
people to make clothing, and still others to design computer software. Once society
has allocated people (as well as land, buildings, and machines) to various jobs,
T E N P R I N C I P L E S
O F E C O N O M I C S
3
Consider why trade
among people or
nations can be good
for everyone
Discuss why markets
are a good, but not
per fect, way to
allocate resources
Learn what
determines some
trends in the overall
economy
4 PART ONE INTRODUCTION
it must also allocate the output of goods and services that they produce. It must
decide who will eat caviar and who will eat potatoes. It must decide who will
drive a Porsche and who will take the bus.
The management of society’s resources is important because resources are
scarce. Scarcity means that society has limited resources and therefore cannot produce
all the goods and services people wish to have. Just as a household cannot
give every member everything he or she wants, a society cannot give every individual
the highest standard of living to which he or she might aspire.
Economics is the study of how society manages its scarce resources. In most
societies, resources are allocated not by a single central planner but through the
combined actions of millions of households and firms. Economists therefore study
how people make decisions: how much they work, what they buy, how much they
save, and how they invest their savings. Economists also study how people interact
with one another. For instance, they examine how the multitude of buyers and
sellers of a good together determine the price at which the good is sold and the
quantity that is sold. Finally, economists 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.
Although the study of economics has many facets, the field is unified by several
central ideas. In the rest of this chapter, we look at Ten Principles of Economics.
These principles recur throughout this book and are introduced here to give you
an overview of what economics is all about. You can think of this chapter as a “preview
of coming attractions.”
HOW PEOPLE MAKE DECISIONS
There is no mystery to what an “economy” is. Whether we are talking about the
economy of Los Angeles, of the United States, or of the whole world, an economy
is just a group of people interacting with one another as they go about their lives.
Because the behavior of an economy reflects the behavior of the individuals who
make up the economy, we start our study of economics with four principles of individual
decisionmaking.
PRINCIPLE #1: PEOPLE FACE TRADEOFFS
The first lesson about making decisions is summarized in the adage: “There is no
such thing as a free lunch.” To get one thing that we like, we usually have to give
up another thing that we like. Making decisions requires trading off one goal
against another.
Consider a student who must decide how to allocate her most valuable resource—
her time. She can spend all of her time studying economics; she can spend
all of her time studying psychology; or she can divide her time between the two
fields. For every hour she studies one subject, she gives up an hour she could have
used studying the other. And for every hour she spends studying, she gives up an
hour that she could have spent napping, bike riding, watching TV, or working at
her part-time job for some extra spending money.
scarcity
the limited nature of society’s
resources
economics
the study of how society manages its
scarce resources
CHAPTER 1 TEN PRINCIPLES OF ECONOMICS 5
Or consider parents deciding how to spend their family income. They can buy
food, clothing, or a family vacation. Or they can save some of the family income
for retirement or the children’s college education. When they choose to spend an
extra dollar on one of these goods, they have one less dollar to spend on some
other good.
When people are grouped into societies, they face different kinds of tradeoffs.
The classic tradeoff is between “guns and butter.” The more we spend on national
defense to protect our shores from foreign aggressors (guns), the less we can spend
on consumer goods to raise our standard of living at home (butter). Also important
in modern society is the tradeoff between a clean environment and a high level of
income. Laws that require firms to reduce pollution raise the cost of producing
goods and services. Because of the higher costs, these firms end up earning smaller
profits, paying lower wages, charging higher prices, or some combinati