MGEA02H3 Lecture Notes - Lecture 3: Utility, Substitute Good, Barter

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MGEA02H3 Full Course Notes
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MGEA02H3 Full Course Notes
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Mgea02h3 lecture 3 markets: supply and demand. Lecture 3 will cover chapters 3 and appendix 3a of the microeconomics textbook. Economics is the study of the allocation of scarce resources to among competing uses. In this course, we will study how decisions are made by rational (or utility-maximizing) individuals and (profit-(cid:373)a(cid:454)i(cid:373)izi(cid:374)g) fi(cid:396)(cid:373)s, th(cid:396)ough (cid:373)a(cid:396)kets, to allo(cid:272)ate so(cid:272)iet(cid:455)(cid:859)s e(cid:272)o(cid:374)o(cid:373)i(cid:272) (cid:396)esou(cid:396)(cid:272)es to alternative possible uses. And by resources, we mean the scarce or limited amounts of land, labour, and physical or productive capital that society has at its disposal. Other names for resources include inputs or the (cid:858)factors of production(cid:859). Since every society has limited amounts of resources, they face limitations on how much output they can make and thus consume. In this case, each society and each of the members within it face choices as to how best allocate their scare resources. Fortunately, as it turns out, markets and the price signals they convey help assist with these allocation decisions.

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