EC120 Lecture Notes - Lecture 1: Externality, Market Failure, Market Power
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EC120 Full Course Notes
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Govnts, companies & individuals make many decisions about safety. Highway construction and maintenance affects road safety at a price. Speeds limits trade-off travel efficiency w road facilities//injuries. Airport security involves costs and safety expectations. Public healthcare requires constant attention to this question. Society needs to allocate resources within and across sectors. Scarcity (a scarce resource): the limited nature of society"s resources (less of a good/resource available than ppl wish to have) Economics: the study of how society manages scarce resources. Society: think broadly- people, government, market systems, etc. If a resource is scarce- use involves an opportunity cost. Micro- the study of the decisions of individuals, households and firms, and how they interact in an economy. Macro- the study of aggregated economic outcomes such as inflation, unemployment, or economic growth (the rates) Rational people think about their decisions: people face trade-offs, society faces trade-offs (efficiency vs equity, opportunity cost. Cost is what you give up to get something.
