ECON 1101 Lecture Notes - Lecture 1: Watt, Open Outcry, Multiunit Auction
Document Summary
Economics 1101: lecture 1: chapter 1 lecture from principles of microeconomics. Economics is the study of choice; the choices of individuals to best allocate scarce resources. Scarcity: unlimited wants, limited resources, and requires trade-offs. Trade-offs: the compromise between two (or more) choices. Tells an idea, but not an exact replica of what"s going on; very simple. Single-sided auction: one buyer or one seller. Double-sided auction: both buyer and seller are bidding. Sealed bid: others don"t know what you bid. Reservation: amount of money a buyer is willing to pay for a good. Sellers face trade-offs: low bid= seller sells good, don"t make as much money, high bid= possibly not sell good, don"t make any profit. No competition= seller price very close to reservation. Competition drives down the price; if bidders know each other"s cost, are not working together, and have the same cost, then the selling price will usually be close to the cost.
