EC 2040 Lecture Notes - Lecture 1: International Trade, Dependent And Independent Variables, Full Employment

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7 Sep 2016
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A social science concerned with making optimal choices under conditions of scarcity. Marginal analysis (additional benefit & additional cost) When resources can only be used for one purpose at a time. Opportunity cost- forgone alternative: ex: there is no free lunch. Rational self interest (when making decisions to achieve the maximum utility/satisfaction) Individuals & utility (the pleasure or satisfaction from consuming a good or service) Desired outcomes (decisions are made with a specific outcome in mind) Comparison between marginal benefit & marginal cost (is the benefit greater than the cost) The scientific method: observation > formulate hypothesis > test hypothesis > accept, reject or modify > continue to test if necessary. Generalization: expressed as the tendencies of the typical or average consumer, worker of business firm. Other-things-equal assumption: ceteris paribus (hold other contributing factors constant) Graphical expression: many economic relationships are quantitive and expresses with graphs. Microeconomics: study of the individual consumer, firm or market.

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