ECON 160 Lecture Notes - Lecture 1: Opportunity Cost, Invisible Hand, Progressive Tax
13 Sep 2016
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Scarcity: a society has limited resources and cannot produce all goods and services they want. Economics: study of how to manage these scarce resources and allocate them across different activities. As a student, time is a scarce resource. Have to allocate time to different activities (sleep, party, gym, class, etc) In poor households, money is a scarce resource. Have to allocate money (food, health, rent, saving, etc) When faced with these scarcities, agents(ppl) face trade offs. The more time u spend partying, the less time u spend sleeping. The more money u spend on rent, the less u can spend on food. Efficiency= producing the max amount of scarce resources. Progressive taxation= tax rich to pay for services for the poor=increase equity. Many business owners produce less when taxes go up= reduces efficiency. Cost of something is what u give up to get it. Opportunity cost= what u give up to get something.
