Principles of Economics and Business 1 (6011P0200Y)
Summary
Summary Modern Principles of Economics - Principles of Economics and Business 1 (6011P0200Y) - modern principles of economics
20 views 0 purchase
Course
Principles of Economics and Business 1 (6011P0200Y)
Institution
Universiteit Van Amsterdam (UvA)
Book
Modern Principles of Economics
Business Administration Summary - Principles of economics and business 1 - modern principles of economics (Cowen & Tabarrok). This summary covers all the material you need to know about principles of economics and business from the book modern principles of economics + the notes from the lectures a...
Summary Principles of Economics and Business 1 (Modern Principles of Economics )
All for this textbook (3)
Written for
Universiteit van Amsterdam (UvA)
Business Administration
Principles of Economics and Business 1 (6011P0200Y)
All documents for this subject (13)
Seller
Follow
yemia
Content preview
Chapter 1
There are ‘big ideas’ in economics:
1. Incentives matter
● (=) Rewards and penalties that motivate behavior.
● people respond in predictable ways to incentives of all kinds.
● Fame, power, reputation, sex, money etc.
2. Good institutions align self-interest with the social interest.
When self-interest aligns with the broader public interest are at odds, we get good outcomes,
but when self-interest and the social interest are at odds, we get bad outcomes, sometimes
even cruel and inhumane outcomes.
3. Trade-offs are everywhere
● There are always opportunity costs → the cost of a choice is the value of the
opportunities lost.
● The power of trade.
● Wealth and economic growth are important.
Every choice involves something gained and something lost:
Opportunity cost = the value of the opportunities lost by a choice.
4. Thinking on the margin.
Thinking on the margin is just making choices by thinking in terms of marginal benefits and
marginal costs, the benefits and costs of a little bit more (or a little bit less).
5. Trade makes people better off.
The benefit of trade goes beyond those of exchange:
Trade → specialization → increase in productivity.
6. Wealth and economic growth are important
7. Institutions matter. Two types of institutions:
1. Tangible: police ambulance, etc.
2. Intangible: laws.
8. Economic booms and busts cannot be avoided but can be moderated.
9. Inflation is caused by increases in the supply of money.
● The division of wealth created is determined by exchange rates, prices, wages.
● Differences in wages reflect differences in productivity.
● Wages will be higher in high-productivity countries than in low productivity countries.
● Trade raises wages to the highest levels allowed by a country’s productivity.
Globalization: wages will rise in high-labor-demand
10. Central banking is a hard job.
1
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller yemia. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $5.33. You're not tied to anything after your purchase.
