ECON 1B03 Lecture Notes - Lecture 2: Productive Efficiency, Comparative Advantage, Absolute Advantage

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ECON 1B03 Full Course Notes
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ECON 1B03 Full Course Notes
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Document Summary

Economics: study of how society allocates scarce resources to satisfy societies unlimited wants. Scarcity: society has limited resources and therefore cannot produce all the goods and services people wish to have. Microeconomics: individual parts of the economy: how we make decisions and how they interact in specific markets. Market economy: decentralized decisions of firms and households, households decide what to buy and who to work for, firms decide who to hire and how much to produce. Economic rationality: purposefully using info to make the best decisions for oneself to achieve objective. Asymmetrical information: someone knows more about something than someone else (more common) Resource: anything used to make something else, factor of production/inputs, the big 4, labour, land, capital, entrepreneurship. Opportunity costs: to get one thing, you usually have to give up something else. The cost of the best forgone alternative: explicit costs things you can get a receipt for.

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