Economics and Business EBC1009 Summary

Chapter 1

Economics: The study of how people make choices under conditions of scarcity and of the

results of those choices for society.

Core principles of economics:

• Scarcity Principle (no-free-lunch principle): Although we have boundless needs and wants, the resources available to us are limited. So having more of one good thing usually means having less of another. Hence the clich, "there ain't no such thing as a free lunch", sometimes reduced to the acronym TANSTAAFL.
• Cost-Benefit Principle: An individual (or a firm, or society) should take an action if, and only if, the extra benefits from taking the action are at least as great as the extra costs