ECN 104 Lecture Notes - Lecture 1: Opportunity Cost, Better Off, Human Capital

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11 Oct 2016
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Microeconomics: study individual decisions and how they interact. Concept of cost of making a decision. Individual choice is the decision by an individual of what to do, which necessarily involves a decision of what not to do. A resource is anything that can be used to produce something else: examples: land, labour, capital, human capital, time. Resources are scarce the quantity available isn"t large enough to satisfy all productive uses. The true cost of an item is its opportunity cost. Opportunity cost is crucial to understanding individual choice. The bumper stickers that say i would rather be (fishing, golfing, swimming, etc ) are referring to opportunity cost. It is all about what you have to forgo to obtain your choice. Think: movie a vs movie b at cineplex. How much? is a decision at the margin. The study of such decisions is known as marginal analysis: examples: hiring one more worker, studying one more hour, eating one more.

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