ECON101 Lecture Notes - Lecture 2: Espresso, Economic Model, Opportunity Cost

• School: University of Waterloo
• Department: Economics
• Course: ECON101
• Professor: Wokia Kumase

Document Summary

Econ101-004 lecture 2 the economic way of thinking. Tonight, you can make notes for econ or go out with your friends. If you like your coffee black, it is rational for you to choose espresso. A benefit is always a positive reason whereas there can be many incentives that are positive or negative: cost: what you must give up, opportunity cost: the highest forgone alternative. There are 2 components of opportunity cost: money: the things you can"t afford to buy now, estimated value of forgone opportunity: the things you can"t do with your time, ex. The marginal benefit from one more night of study is an increase in your grade. Economics as a social science: positive statements: a statement that can be right or wrong; it can be tested against the facts by using data to test hypothesis. If you increase taxes, the unemployment rate will increase. (can be proven through research: normative statements: a statement that contains value judgements.