ECON 1 Lecture Notes - Lecture 1: Business Cycle, Scientific Method

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Opportunity costs- obtain more of one thing forgoes the opportunity of getting the next best thing. Utility- the pleasure, happiness or satisfaction obtained from consuming a good or service. A decision made on utility that considers time, expense and available is a rational decision. Purposeful decisions- a decision made with some desired outcome in mind. Marginal analysis: the comparison of marginal benefits and cost for a decision. Scientific method is used with economics in the following manner: Base on those observations and formulate a possible explanation of cause and effect. Test this explanation by comparing the outcomes of specific events to the outcome predicted by the hypothesis. Continuing to test the hypothesis until it is widely accepted theory is referred to as an economic principle- a statement about economic behavior or the economy that enables prediction of the probable effects of certain actions. Generalizations- relate to economic behavior or to the economy itself.

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