01:220:102 Lecture Notes - Lecture 1: Profit Motive, Opportunity Cost, The Incentive
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Document Summary
Economics - comes from the greek word "okionomia", which roughly translates to "household management" Economics is a social science, which is analyzes the aspects of social behaviors and institutions that are involved in using the scarce resources to produce and distribute limited goods and services to satisfy unlimited human wants. An understanding of economics in necessary to be an informed citizen. Macroeconomics deals with the economies as a whole thus focusing on inflation, Microeconomics deal with the decision making of individuals, households and how those relate to cost and profits. Economy controlled by central planning board(wages, prices, supply, etc. ) Invisible hand (supply and demand are organic; price controlled by consumer) However communism simply focuses on wealth creation whereas socialism look to find the most efficient way to spread a country"s wealth. How do we slice the pie versus how do we make the pie bigger. Zero sum fallacy: when someone is making money someone else is losing money.
