ECON 1BB3 Lecture Notes - Externality, Opportunity Cost

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ECON 1BB3 Full Course Notes
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ECON 1BB3 Full Course Notes
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How people make decisions: people face tradeoffs, the cost of something is what you give up to get it. Opportunity cost (buying a coffee what else you would be doing with those 2 dollars: rational people think at the margin(edge) additional step. Cost and benefits ---------- additional costs/benefits (all relevant: people respond to incentives. How people interact: trade can make everyone better of. If we add up all the people that are negatively affected by fair trade, the number is smaller compared to the number of people who are bettered by fair trade: markets tend to increase efficiency. Centrally planned communism (equity) having more equity tends to make us less efficient. How much can we produce: sometimes the government an eliminate market inefficiencies. Externality when a transaction between two people affect a third party. How the economy as a whole works: a country"s standard of living depends on its productivity.

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