ECON 1B03 Lecture Notes - Lecture 1: Market Economy, Opportunity Cost, Unit
3 Dec 2017
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ECON 1B03 Full Course Notes
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Document Summary
Black: how goods and services move through the economy. Blue: how financial institutions function in the economy. Green: how foreign markets function in the economy. Economics: the study of how society allocates scare resources to satisfy society"s unlimited wants. Scarcity: society has limited resources and therefore cannot produce all the goods and services people wish to have. Microeconomics: focuses on the individual parts of the economy: how households and firms make decisions and how they interact in specific markets. Macroeconomics: looks at the economy as a whole: economy-wide phenomena, including inflation, unemployment and economic growth. Market economy: allocates resources through the decentralized decisions of firms and households. Households: decide what to buy and who to work for. Firms: decide who to hire and how much to produce. Economic rationality: systematically and purposefully using information to make the best decision to achieve objectives. Perfect information: everyone knows everything with no uncertainty. Asymmetrical information: someone knows more about something than someone else.
