ECON101 Lecture Notes - Lecture 5: Fallacy

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Mesbah Sharaf

Document Summary

Positive incentives are used to encourage an activity. By increasing its bene ts or decreasing its cost(ex. Negative incentives are used to discourage an activity by decreasing its bene ts or increasing its cost(ex. Goods- are items that we desire or value(ex. Bads- are items that we do not desire(ex. Correlation- two events or variables tend to occur/happen together but none of them cases the other(ex. Causation- one event or variable causes another event to happen. Hypothesis- is a proposition or a claim that could be tested. Empirical analysis- we examine the data to see if a hypothesis or a theory is correct or not. E ciency- to get the most output possible out of our resources. Market failure- the free market(no intervention from the govt) fails to achieve e ciency. Symptoms; existence of pollution & the existence of monopoly(single seller), externalities(bene ts or costs to others).