[ECO100Y1] - Final Exam Guide - Ultimate 24 pages long Study Guide!
Document Summary
In the presence of scarcity we have to make choices. Problem of scarcity: implies that we must make choices, both individual and society as a whole. Economics: study of how rational people make choices. You buy, in advance, a ticket for a hockey game at the discounted price of 75$. When you arrive, you discover that you have lost the ticket. If you are rational, there is a correct answer. Opportunity cost: the opp cost of an action is what one forgoes (gives up) by not. Insight: to identify the opp cost of taking an action, one must identify the next best alternative. The opp cost of spending 1$ is 1$ (since you could spend this dollar on other goods or services). Opp cost includes time costs as well as money costs (class examples emphasize this fact) If the opp cost of an action is high, one is less likely to take the action.
