ECN E101 Lecture Notes - Lecture 1: Macroeconomics, Opportunity Cost
Document Summary
There are three types of resources: land, capital (money and experience), and labour. Our main goal is life is to maximize our level of satisfaction. We have to make choices because we cannot have everything. These choices come at a cost (which is opportunity costs discussed later) Purposefully behave in the way that will best achieve their goals, called rational behaviour (helps to explain a lot about the world from shoe shopping to baseballs, from running a hospital to running for political office) Peoples" decision can be studied using four main questions: What are their wants and constraints? (this relates to scarcity) What are their trade-offs? (this relates to opportunity costs) How will others respond? (this relates to incentives) Why isn"t everyone doing it? (this relates to efficiency) Economics is the science of scarcity (doing the best we can with what we have) People make decisions aimed at getting the things they want.
