EC 110 Lecture Notes - Lecture 2: Comparative Advantage, Opportunity Cost, Absolute Advantage
16 Jan 2017
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***efficiency: you can"t increase the output of one good without decreasing the output of another good. Society is getting the max benefits from its scarce resources(regulating cable prices, prohibiting smoking in public places, breaking up standard oil into smaller companies, and instituting laws against driving while intoxicated. ***equality: means that those benefits are distributed uniformly among society"s members. Providing some poor people with vouchers that can be used to buy food and imposing higher personal income tax rates on people with higher incomes are examples of activities motivated by equality. Micro: focuses on the individual parts of the economy. How households and firms make decisions and how they interact in specific markets. Positive statements: statements that attempt to describe the world as it is. Normative: are statements about how the world should be. An increase in the minimum wage will cause a decrease in employment among the least skilled. (answer: positive)
