BSB113 Lecture Notes - Economic Equilibrium, Tax Rate, Ceteris Paribus
Document Summary
Bsb113 economics lecture notes from week 1 - 3. What economists assume: people are rational, people respond to economic incentives, optimal decisions are made at the margin, we are selfish, firms make decision that maximize profit, governments make decisions that maximize the welfare of society. Individuals make choices that maximize their own welfare/utility/happiness. Opportunity cost: the cost in terms of the most valuable alternative that is sacrificed, spending limited resources on a selection of wants and needs. Market demand is the demand by all the consumers of a give good or service. The market demand curve is derived by horizontally summing all the individual demand curves for a good or service. The ceteris paribus condition: all else being equal . Requirement that when analysing the relationship between two variables, such as price and quantity demanded, other variables must be held constant.
