EC120 Lecture Notes - Lecture 1: Mixed Economy, Planned Economy, Market Economy
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EC120 Full Course Notes
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Governments, companies, and individuals make many decisions about safety. Speed limits trade-off travel efficiency with road fatalities/injuries. Airport security involves costs and safety expectations. Public healthcare requires constant attention to this question. Scarcity: the li(cid:373)ited (cid:374)ature of society"s resources. Economics: the study of how society manages scarce resources. Society: think broadly; people, government, market systems, etc. Essentially all resources are scarce (ie. limited) If a resource is scarce or limited, use involves an opportunity cost. If resources are scarce, society must make choices. 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. If resources are scarce, choices imply foregone alternatives. These alternatives are defi(cid:374)ed as the (cid:862)opportu(cid:374)ity cost(cid:863) of as choice. Opportunity cost may be defined in monetary terms better to define it as the value of an alternative choice.
