ECON 208 Lecture Notes - Opportunity Cost, Barter, Resource Allocation
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ECON 208 Full Course Notes
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The economy is a complex system. A free market economy is self- organizing: spontaneous economic order through self interest. Main characteristics of market economies: self interest. Incentives: market prices and quantities. Economics is the study of the use of scarce resources to satisfy unlimited humn wants. Resources (factors of production: land, labour, capital. Outputs are good (tangibles) or services (intangibles). Production is the act of making goods and services. Consumption is the act of using them to satisfy wants. Scarcity implies the need for choice. Making choices implies the existence of costs. Opportunity cost every choice has an associated cost. Opportunity cost is defined as the benefit given up by not using resources in the best alternative way. It illustrates: scarcity, choice, opportunity cost. Chapter 1: economic issues and concepts. Choice is shown by different points on the curve. Individuals own factors of production. They sell these services to producers in factor markets and receive payment in return.