ECN 001A Lecture Notes - Lecture 4: Opportunity Cost, Scientific Method, Microeconomics
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ECN 001A Full Course Notes
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Econ-b05 lecture 4 notes - thinking like an economist. The cost of any action is measured in terms of foregone opportunities. Rational people make rational decisions by comparing marginal costs and marginal benefits. The principles of interactions among people are: Markets are usually a good way of coordinating trade. The principles of the economy as a whole are: Productivity is the ultimate source of living standards. Money growth is the ultimate source of inflation. Society faces a short-run tradeoff between tradeoff and unemployment. In the first, economists employ the scientific method (the dispassionate development and testing of theories about how the world works). Assumptions simplify the complex world, make it easier to understand. To study international trade, assume two countries and two goods. (simple to learn and gives useful insights about the real world). Model: a highly simplified representation of a more complicated realty. Example: a road map, a model of human anatomy, a model airplane, and a model teeth.
