ECON 1020H Lecture Notes - Lecture 1: Ceteris Paribus, Marginal Utility, Opportunity Cost
10 Jan 2017
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Document Summary
All economic questions arise because we want more than we can get. Our inability to satisfy our needs is called scarcity. Entrepreneurship(profits: everything has a cost, things always change (ceteris paribus, metaphorical time bombs don"t explode ie. Normative claims that attempt to prescribe how the world should be. Positive claims tat attempt to describe the world as it is. The economic way of thinking places scarcity and its implication, choice, at center stage. Only the wants of the person making a choice are relevant to determine its rationality. The opportunity cost of something is the highest-valued alternative that must be given up to get it. Benefit of pursuing an incremental increase in an activity is its marginal benefit. The opportunity cost of pursuing an incremental increase in an activity is its marginal cost. Efficiency: maximizing output with available resources point on pp curve. Inefficiency: under utilization of resources any point below pp.
