ECN 104 Lecture Notes - Lecture 1: Business Cycle, Invisible Hand, Opportunity Cost
Document Summary
Economics is the social science concerned with how individual, institutions and society make optimal (best) choices under condition of scarcity. Market economy free will (no central authority) Scarcity restricts our options and required choices. Choices we need to make choices because resources are scarce. A resource is scarce when there is not enough resources available to satisfy the consumers/society needs and wants. Of an item is what you must give up in order to get an item you want is its true cost (monetary or non-monetary) People make decisions with desired outcome in mind and people usually respond to incentives to exploit the opp. until these opp. have been full exhausted. We weigh costs and benefits, so our decisions are rational. Marginal analysis (cid:862)ho(cid:449) (cid:373)u(cid:272)h(cid:863) is a decision made at the margin. Gains from trade arises from the division of tasks which economists call; specialization.
