ECON 104 Lecture Notes - Lecture 2: Homo Economicus, Opportunity Cost, Demand Curve

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Econ 104
Lecture 2
Economics
-“Study of behaviour”, or even better to think as “study of choice”
-Official definition: “study of allocating scarce resources to achieve some goals”
-What economist do
-An art of taking common sense and making it incomprehensible.
A special way of thinking about behaviour.
Neoclassical Economics
-1) People are maximizers
-2) Diminishing marginal value
-3) Equilibrium
-4) Opportunity cost
5) Thinking “on margin”
How science works
-1) Testable hyposeses
-2) Empirical evidence
-3) (Common procedures)
Models: “VERY” simplified “copy” of the thing
-It can be anything (statements,etc…)
-We want to think about stuff so we have to experiment to know if it works
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