This document discusses several economic principles:
1. People face tradeoffs because resources are limited while wants and needs are unlimited. This means people must choose between alternatives.
2. Opportunity cost refers to the next best alternative given up when a choice is made. It is the cost of something measured in terms of what is sacrificed or lost to acquire it.
3. Rational people think at the margin, meaning they consider small or incremental changes in decisions rather than large or extreme changes.
2. man has
unlimited
wants and
needs
resources
are scarce
and
limited
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Juan wants to buy
many things.
He has 300 pesos
to spend.
Php300= 6
burgers Php300= 11
liters
Php300= 1
text book
If Juan decides to buy
the text book he will
have to give up the 6
burgers and 11 liters
of Coke
15. Principle 8: A Country’s Standard of Living Depends on
its Ability to Produce Goods and Services
Productivity: the quantity of goods and
services produced from each hour of a
worker’s time
Zamora
16. More goods and services
produced per hour of working
time
Higher the overall income of
the country (so more needs
can be provided for)
Better standard of living for
people
