The Cost of Some think Is What You Give Up to Get It
Rational People Think at the Margin
People Respond to Incentives
How people interact
Trade Can Make Everyone Better Off
Markets Are Usually a Good Way to Organize Economic Activity
Government Can Sometimes Improve Market Outcomes
How the economy as a whole works
A Country′s Standard of Living Depends on Its Ability to Produce Goods and Services
Prices Rise When the Government Prints Too Much Money
Society Faces a Short-Run Trade-off between Inflation and Unemployment
Chapter 2
Thinking Like an Economist
The Economist as Scientist
The Scientific Method: Observation，Theory，and More Observation
The Circular- Flow Diagram
The production Possibilities Frontier
A Shift I the production Possibilities Frontier
（Technological advances. resources ）
microeconomics
the study of how households and firms make decisions and how they interact in markets
macroeconomics
the study of the economy wide phenomena，including inflation，unemployment，and economic growth
Chapter3
Interdependence and the Gains from Trade
Absolute advantage
the ability to produce a good using fewer inputs than another producer
Comparative advantage
the ability to produce a good at a lower opportunity cost than another producer
Opportunity cost
whatever must be given up to obtain some item
Chapter 4
The Market Forces of Supply and Demand
Competitive market
a market in which there are many buyers and many sellers so that each has a negligible impact on the market price
Market demand as the sum of individual demands
Market supply as the sum of individual supplies
Law of supply: Other things equal ，the quantity supplied of a good rises when the price of the good rises
Law of demand: Others things equal ，the quantity demanded of a good falls when the price of the good rises
equilibrium quantity
the quantity supplied and the quantity demanded at the equilibrium price
Three steps for analyzing changes in equilibrium
1. Decide whether the event shifts the supply or demand curve（or perhaps both)
2. Decide in which direction the curve shifts
3. Use the supply-and -demand diagram to see how the shift changes the equilibrium price and quantity
What Happens to Price and Quantity When Supply or Demand Shifts
