ECN 104 Lecture Notes - Lecture 1: Marginalism, Human Capital, Scientific Method
Document Summary
The individual: facing trade-offs, opportunity costs, choosing a little more or less, the influence of incentives. Interaction among individuals: specialization and trade, the effectiveness of markets, the role of governments. The economy as a whole and the standard of living: production and the standard of living, money and inflation, inflation-unemployment trade-off. Purposeful behaviour -acting based on rational decisions. Marginal analysis:benefits and costs-seeing the pros and cons if something were to be added (like a product) Test by comparing actual outcomes to hypothesized predictions. Graphical expression-two dimension graph with x and y. Microeconomics examines: individual units (household,firm,industry) and their decision making process( tree in forest) Macroeconomics examines: the whole economy, the subdivision or aggregates ( the whole forest) Positive economics: analysis of facts to establish cause and effect relationships. Normative economics: the part of economics involving value judgements about what the economy should be like. A budget line: attainable and unattainable options, tradeoffs and opportunity costs, make the best choice possible.
