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Lecture 1

HIS109Y1 Lecture Notes - Lecture 1: Absolute Advantage, Comparative Advantage, Relative Price

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Kenneth Bartlett

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ECONOMICS 105: Sept 21st
Chapter One
Scarcity and Choices
Idea that there is’t eough to go aroud to satisf eeds.
Problem of scarcity arises because of limited money, time and energy.
Opportunity Cost
Because of scarcity, every choice involves a trade off you have to give something up to get something
The true cost of any choice is the opportunity cost the cost of the best alternative given up.
For a smart choice, the value of what you get must be greater than the value of what you give up.
Positive Statements:
About what is;
Can be evaluated as true or false by checking the facts.
Normative Statements:
About what you believe should be;
Involve value judgements.
Cannot be factually checked.
For any Policy:
Always weigh benefits against opportunity costs.
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