tailieunhanh - Public Economics

Discuss how incentives af fect people’s behavior 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. | IN THIS CHAPTER YOU WILL . . . Learn that economics is about the allocation of scarce resources Examine some of the tradeoffs that people face Learn the meaning of opportunity cost See how to use marginal reasoning when making decisions TEN PRINCIPLES OF ECONOMICS Discuss how incentives affect people s behavior 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 3 Consider why trade among people or nations can be good for everyone Discuss why markets are a good but not perfect way to allocate resources Learn what determines some trends in the overall economy 4 PART ONE INTRODUCTION scarcity the limited nature of society s resources economics the study of how society manages its scarce resources Ji 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 .