ECO101H1 Lecture Notes - Lecture 3: Gumdrop, The O.C., Opportunity Cost

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ECO101H1 Full Course Notes
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ECO101H1 Full Course Notes
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Announcements: rcla murder mystery, tutorials begin this week. The economic way of thinking: a final perspective. If mc of your time (oc) < , buy both downtown. If mc > , buy both at u of t. In fact, some would travel downtown to save on the book, but not to save on the computer. How, then, do we evaluate the usefulness of economics, which assumes rational decision-making? (what are the implications that not everyone is rational all the time?) Answer: by the accuracy of the predictions of economic analysis is economic as a discipline useful at predicting. Production possibilities frontier (ppf: scarcity (attainable vs not attainable, tradeoffs (choices decisions, opportunity cost. Key application: used to illustrate the benefits of trade, between countries and between individuals through the use of ppf. Production possibilities frontier (for constant opportunity cost linear example) If all of society"s resources were allocated to gumdrops, they"ll produce 10 gum drops and 0 chocolates.

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