01:960:211 Lecture Notes - Lecture 1: Marginal Cost, Empiricism, Invisible Hand
19 May 2016
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Document Summary
Ecomomics: about how you make decisions about everything. Formal definition= a field of ideas and principles which explains and predicts how ppl and businesses go about their daily activities to . Optimize their needs (utility or profit) in a world of limited resources (scarcity) Microeconomics: individual, businesses and the role of government. Macroeconomics: aggregate (a national economy or global economy) Positive economics: building model and drawing conclusions (ex. Normative economics: opinion-based conclusions (ex. minimum wage is way too high/ low, so it should be lower/ higher) (ex. Opportunity costs: you must make trade-offs in pursuit of your rational interest. Any decision involves a marginal (extra) benefit vs a marginal (opportunity) cost. Opportunity cost is the cost arising because we live in a world of limited resources. The economizing problem of an individual arises because wants exceed our resources. Equity efficiency trade off = but is it fair" question.
