ECON 105 Lecture Notes - Lecture 2: Social Studies, Opportunity Cost

• School: Simon Fraser University
• Department: Economics
• Course: ECON 105
• Professor: Brian Krauth

Document Summary

Social - studies human behavior, and its consequences. Economists use models to understand the world, more so than other social sciences. A model is a simplified representation (in other words, pictures and / or math) of a more complex reality. Propose a model of social process of interest. If model and reality are consistent (enough), keep it. Normative and positive analysis. (what it should be / what it is) Firms > goods & services sold > market for goods & services > goods and services bought > households > labour, land, capital > markets for factors of production. Thing to remember about the circular flow model. Every transaction benefits both sides (cid:523)or they won"t occur(cid:524) Every flow is equal in value: (revenue) = (spending) = (income) = (wages/rent/profit) = (goods. Bought) = (goods sold) = (land/labour/capital) = (factors of. Our economy consists of a single individual (al) Al can work up to 40 hours a week.