Lecture Notes Week 1-3
Economics is mainly a study of scarcity and how to manage resources to fulfill an unlimited number of
-The main economic problem is scarcity; the number of items available is less than the wants for
that item. This means a choice must be made.
People Face Trade Offs
-People make decisions with everything they do. They must decide not to sleep when they wake
up. They must decide whether to work rather than have fun or vice versa.
-People make these trade-offs by deciding what they want more.
-Every time someone makes their decision they give up the next best option.
-A physical payment of money or item traded for another good or service. i.e. Giving
money for a movie ticket or trading one candy bar for another.
A cost that is not tangible but the things you gave up to get something else. When you
go to a movie you give up the time that you could have spent making money. Very commonly this is
calculated in as time.
-Total Opportunity Cost
-The sum of the explicit costs plus the implicit costs.
(explicit cost) + (implicit cost) = Tota