ECON 0100 Lecture Notes - Lecture 99: Fixed Cost, Normal Good, Alcoa
Document Summary
Economics: the social science that studies the choices that individuals, businesses, governments, and entire societies make when they cope with scarcity and the incentives that influence and reconcile those choices. Scarcity: the inability to satisfy all our wants. Incentive: a reward that encourages a choice or a penalty that discourages a choice. Microeconomics: the study of the choices that individuals and business make, the way these choices interact in markets, and the influence of governments. Adam smith- the wealth of nations (1776) author and founder of modern economics. Trade-off: an exchange where one thing is given up for another. People are rational: people use costs and benefits to determine what choices they want to make, choices at the margin. Nor(cid:373)ati(cid:448)e tate(cid:373)e(cid:374)ts: are a(cid:271)out (cid:862)(cid:449)hat ought to (cid:271)e(cid:863). Scarcity creates a need to make choices. Economic choices can be evaluated in terms of efficiency. 2 models will help us to think about the implications of scarcity:
