ECO100Y5 Lecture Notes - Opportunity Cost

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ECO100Y5 Full Course Notes
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ECO100Y5 Full Course Notes
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Economics: the study of the use of scarce resources to satisfy unlimited human wants. Seeks to understand the choices that individuals, firms and governments make when faced with constraints (time, financial, resource) Microeconomics: the study of allocation of resources as it is affected by the workings of the prices system; individuals, firms, and markets. Macroeconomics: the study of determination of economic aggregates such as total output, price level, employment, growth; how they function together as a whole. Resources can produce only fraction of g/s desired and scarcity implies the need for choice and every choice has associated cost- opportunity cost. Opportunity cost: benefit given up by not using resources un the best alternative way. Illustrates: scarcity (points outside the boundary), choice (points along the line/boundary and inside the boundary), and opportunity (negative slope) Efficiency: organizing available resources to produce g/s people value the most, using the fewest possible resources.

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