ECO 101 Lecture Notes - Lecture 1: Sewage Treatment, Empiricism, Opportunity Cost
Document Summary
Study of human behavior and choices they make. Economic agents- individual or group that makes choices; we are all economic agents. Scarce resources- things people want, where quantity desired exceeds the amount available. Oil, food, elephants, diamonds, printer ink, clean air (goods) Anything that people want can be exchanged for money. Corresponding goods include garbage removal, sewage treatment, and medicine. Scarcity- unlimited wants in a world of limited resources. Economics- how economic agents choose to allocate scarce resources, and how these choices affect society. Another car on the road increases congestion and pollution. Recommend what people should do descriptive= positive prescriptive= normative. This is basically an anti landfill agenda, therefore subsidizing recycling will likely be supported. In any of these circumstances a subjective judgement must be made. Microeconomics- study the choices of individuals and firms. Principles of economics: optimization- people try to pick the best option, equilibrium- no agent would benefit by changing her behavior, empiricism- evidence based analysis.
