Ekonomi Pengantar

• What is the origin of the word "economy"?


  The Greek word "oikonomos," meaning "one who manages a household."
• How do households and economies have much in common?


  Both must allocate scarce resources among their members.
• What decisions must a household make regarding its members?


  Which tasks each member will perform and what they will receive in return.
• What is the significance of scarcity in economics?


  It means that society cannot produce all the goods and services people wish to have.
• What is economics the study of?


  How society manages its scarce resources.
• How are resources typically allocated in most societies?


  Through the combined choices of millions of households and firms.
• What do economists study regarding individual decision-making?


  How much people work, what they buy, how much they save, and how they invest.
• What do economists analyze about the economy as a whole?


  The growth in average income, unemployment rates, and inflation rates.
• What are the Ten Principles of Economics?


  1. People face trade-offs.
  2. The cost of something is what you give up to get it.
  3. Rational people think at the margin.
  4. People respond to incentives.
  5. Trade can make everyone better off.
  6. Markets are usually a good way to organize economic activity.
  7. Governments can sometimes improve market outcomes.
  8. A country’s standard of living depends on its ability to produce goods and services.
  9. Prices rise when the government prints too much money.

  10. Society faces a short-run trade-off between inflation and unemployment.
• What does the saying "There ain’t no such thing as a free lunch" imply?


  To get something we like, we usually have to give up something else.
• How does a student face trade-offs in allocating her time?


  By deciding how much time to spend studying different subjects versus other activities.
• What is a classic trade-off society faces?


  The trade-off between "guns and butter."
• What does efficiency mean in the context of economics?


  Getting the maximum benefits from scarce resources.
• What does equality refer to in economic terms?


  Distributing economic prosperity uniformly among society's members.
• How do government policies aimed at equality affect efficiency?


  They often reduce efficiency by altering incentives to work hard.
• What is the opportunity cost of an item?


  What you give up to obtain that item.
• What is the largest cost of going to college for most students?


  The earnings they give up to attend school.
• What does rational decision-making involve?


  Systematically comparing costs and benefits to achieve objectives.
• What is the marginal cost of streaming an additional movie if you already pay for a subscription?


  The marginal cost is zero since the subscription fee is fixed.
• Why do rational people think at the margin?


  To make decisions based on small incremental adjustments.
• Why is water cheap while diamonds are expensive?

  Because the marginal benefit of an extra cup of water is small, while for diamonds it is large due to their rarity.
• What is an incentive?


  Something that induces a person to act, such as a reward or punishment.
• How do rational people respond to incentives?


  They make decisions by comparing costs and benefits.
• What is the marginal benefit of an extra cup of water?


  Small, because water is plentiful
• Why is the marginal benefit of an extra diamond large?


  Because diamonds are rare
• What does a rational decision maker do regarding marginal benefit and marginal cost?


  They take an action if the marginal benefit exceeds the marginal cost
• How does the principle of marginal thinking explain the use of movie streaming services?


  People use them as long as the marginal benefit exceeds the marginal cost
• Why are airlines willing to sell tickets below average cost?


  Because the marginal benefit of selling an additional ticket exceeds the marginal cost
• What is the central role of incentives in economics?


  Incentives induce people to act by comparing costs and benefits
• What is an incentive?


  Something that induces a person to act
• How do people respond to incentives according to economic principles?


  They alter their behavior based on the costs and benefits presented
• What happens when the price of apples rises?


  People eat fewer apples and orchards hire more workers
• Why should public policymakers consider incentives?


  Because policies can change the costs or benefits people face
• How does a tax on gasoline affect consumer behavior?


  It encourages people to drive smaller, more fuel-efficient cars
• What unintended consequences can arise from failing to consider incentives in policy-making?


  Policies may lead to behavior changes that were not anticipated
• How did the introduction of seat belt laws affect driver behavior?


  It altered incentives, leading to faster and less careful driving
• What was the direct effect of seat belt laws on auto safety?


  They increased the likelihood of surviving an auto accident
• What did Sam Peltzman's study conclude about auto safety laws?


  They resulted in fewer deaths per accident but more accidents overall
• What is the main principle behind the idea that people respond to incentives?


  Policies must consider both direct and indirect effects on behavior
• How is economics best defined?


  As the study of how society manages its scarce resources