ECON 162 Lecture Notes - Lecture 1: Money Supply, Chocolate Chip Cookie, Farm Water
19 Oct 2016
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Chapter 1: choose an item that one of you had for breakfast this morning, make a list of the people who brought it to you. Economics is the study of choices that arise from scarcity (not enough of something) Formally: the study of how individuals and colonizations allocate scarce resources among alternative uses to satisfy unlimited human wants. Markets provide a higher standard of living leads to self-sufficiency. We rely on others to allow us to be self-sufficient = saves time. Time is scarce, so it affects our choices. Opportunity cost: benefit foregone from not choosing the next best alternative. Microeconomics: individual decision making (small-scale) i. e. households, firms, markets. Macroeconomics: aggregate economic variables (large-scale) i. e. gdp, unemployment, inflation, money supply, interest rates, exchange rates. Use of assumptions complex reality simple model. Overriding assumptions (assumptions to build models: rational self-interest, more is better, ceteris paribus - everything else held constant .
