Principles of Macroeconomics-ECO 2013 Section 0001Thomas Martin by pharmphresh31

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									Principles of Macroeconomics-ECO 2013: Section 0001/Thomas Martin:

“Ten Principles of Economics” 8/23/2007
1. scarcity exists => choices must be made
       -relationship between demand and how much is available
       -Trade-offs exist
       -opportunity costs exist!

       Production Possibility Frontier (PPF)




2. Rational behavior:

          • S, > S2 >…> Sn
          ( Being at the beach is better than being in class, which is better than being in
          jail)
                      -Well-ordered preferences
          • S1 > S2 > and S2 > S3
                      S1 > S3 (transitivity)
                 Therefore, one prefers being at the beach rather than being in jail

          •   Rational behavior makes sense to maximize satisfaction; depends on
              circumstances

								
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