ECON 1B03 Lecture Notes - Opportunity Cost, Stagflation, Externality

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

Individual make decision (individual people/firm: people face tradeoffs equity vs. efficiency, the cost of something is what you give up to get it. As we become more efficient, we become less equitable (distribution: rational people think at the margin. Economic assume most people are rational most of the time. Take cheaper one as any normal people would do. Benefit vs. cost/earning: people respond to incentives. Taxes raised on smoke so less people have health problem which the government save on health fees. How people interact: trade can make every better off. Collectively the gain from the winner is bigger than the loser. If we can equally distribute the fain, then everyone will be better off: market tend to increase efficiency ( price) Cost of producing and how much people want the product: sometimes the government can eliminate market inefficiencies externality. How the economy as a whole works: standard of living depends on the country"s productivity.