ECON 101 Lecture Notes - Lecture 19: Opportunity Cost
5 Nov 2016
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Document Summary
In econ, there"s the service and agent (provider) Economic agent: makes choices that affects allocation of resources. Economics of life: putting value on life, seems immoral, ex: buying a car that seems safer. Normative doesn"t = positive: deductive logic, optimize ex: government has to gure how to save lives. They gure which is the cheapest and safest way to do it. Tools: optimization: single agent choices equilibrium: state where no economic agent has an incentive to deviate. We get to equilibrium through dynamic or static process. Equality: when prosperity is distributed uniformly among society"s members. Tradeoff: to achieve greater equality, could distribute income from wealthy to poor. But this could reduce incentive to work and produce, shrinks the size of the economic pie . Opportunity costs: any item is whatever must be given up to obtain it. Today: big picture: ef ciency, opportunity cost, markets and ef cient, productive ef ciency ppf, ef ciency equality, sources of market failure.
