ECON 101 Lecture Notes - Lecture 2: Marginal Cost, Opportunity Cost, Marginal Utility
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ECON 101 Full Course Notes
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Two big economic questions: how do choices affect what, how, for whom goods and services are produced, what: varies across countries and changes over time, how: depends on the technology and resources available -> factors of production. Land: gifts of nature: water, oil, minerals, air, gas, coal, air, forests, fish, etc. Labour: work time and effort that people devote. Capital: tools, instruments, machines, buildings: does not include financial capital (money) Entrepreneurship: person organizing it all: for whom: depends on income. The more money you have, the more you can buy: does self-interest also promote social interest, self-interest: the best option for you, social interest the best option for society. Efficient: can"t be improved, the best option. Trade-off giving up one thing for something else. Rational choice compare benefits and costs to find the best choice: marginal benefit > marginal cost. Opportunity cost highest valued alternative that is given up. Marginal benefit what you gain from this choice.
