Study Guides (380,000)
CA (150,000)
McMaster (9,000)
ECON (500)
ECON 1B03 (200)
Study Guide

ECON 1B03- Final Exam Guide - Comprehensive Notes for the exam ( 61 pages long!)Premium


Department
Economics
Course Code
ECON 1B03
Professor
Hannah Holmes
Study Guide
Final

This preview shows pages 1-3. to view the full 61 pages of the document.
McMaster
ECON 1B03
Final EXAM
STUDY GUIDE

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Subscribers Only

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Subscribers Only
Introduction
Economics
Study of how society allocates scarce resources to satisfy society's unlimited wants
What does this mean
Resources are scarce/limited so we need to come up with a way to allocate
these resources to keep everyone happy
Micro
Individual parts of the economy
Looks at households, firms, individuals and how do they make decisions
How does everyone interact in specific markets
Market economy
Firms and households (individuals, not government) get to make all the decisions
Households decide
What they want to buy
Where they want to work
Firms decide
Who they will hire
What and how much they will produce
Basic principles
All economic decisions involve individual choice
Economic rationality
Use all information you can get our hands on to make the best decisions
We assume when people make decisions they are acting rationally
Perfect information
Everyone knows everything there are no questions or uncertainties
Asymmetrical information
There is soeoe ho kos soethig you do’t ko
Example
A hef kos that the salo is fresh that day ut the ustoers do’t,
they can only assume this
Resource
Anything that can be used to make something else
find more resources at oneclass.com
find more resources at oneclass.com
You're Reading a Preview

Unlock to view full version

Subscribers Only

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Subscribers Only
Other terms for resource
Factors of production
Inputs
The big 4 resources
Labour
Land
Capital
Entrepreneurship
Opportunity Costs
Everything you must give up to get something else
The cost of the best alternative
Example
You decide to go McMaster with total expenses of $15 000. Instead of coming to
Mac you could have made $23 000 at Tim Hortons. You also passed up a job at
Walmart where you could have made $25 000.
Your opportunity cost is $40 000. ($15 000 cash you gave up + the best
alternative option which is making $25 000 at Walmart)
Explicit costs
Something that you can get a receipt for
Example
The $15 000 in expenses from the previous example
Implicit Cost
Something that you cannot get a receipt for
Example
The $23 000 that you missed out on in the previous example
Marginal change
Small changes
Adam smith
Book
Wealth of Nations
The invisible hand
Describes how the market economy works
Everyone acts in their own self interest
find more resources at oneclass.com
find more resources at oneclass.com
You're Reading a Preview

Unlock to view full version

Subscribers Only