ECON 201 Lecture Notes - Lecture 1: Marginal Utility, Price System, Fallacy
Document Summary
Economics: choice under scarcity-we have to make certain choices because of scarcity-you can"t have everything. Allocation of scare means among infinite competing ends. You can only choose one, scarcity-> choice, trade-offs are everywhere. Thinking on the margin - benefit & cost. Incentives matter: good institutions align self-interest with the social interest, trade-offs are everywhere, thinking on the margin, the power of trade, the importance of wealth and economic growth. Institution matter: economic booms and busts can"t be avoided but can but moderated, prices rise when the government prints too much money, central banking is a hard job. People are economizing (trying to maximize benefit and minimize cost: value is subjective, utility is the benefit you get. Scarcity necessitates rationing have to choose what ends are unfulfilled: opportunity costs- value of our foregone alternatives. Example: cost of college: tuition: ,000, passing up job: ,000, opportunity cost- ,000 **add b/c not mutually exclusive.
