ECON 2000 Lecture Notes - Lecture 3: Ceteris Paribus, Absolute Advantage, Planned Economy
Document Summary
Chapter 1: the scope and method of economics. Economics the study of how individuals and societies choose the scarce resources that nature and previous generations have provided. Marginalism the process of analyzing the additional or incremental costs or benefits arising from a choice or decision. Efficient market a market in which profit opportunities are eliminated almost instantaneously. Positive economic analysis describes what exists and how it works without making judgments about whether something is good or bad. Normative economic analysis involves judgments and prescriptions for courses of action. Opportunity cost the best alternative that we give up, or forgo, when we make a choice or decision. There are many reasons to study economics including: to learn a new way of thinking, to understand society, to be an informed citizen. Microeconomics the branch of economics that examines the functioning of individual industries and the behavior of individual decision-making units (firms and households).
