EC120 Study Guide - Fall 2018, Comprehensive Midterm Notes - Economic Equilibrium, Normal Good, Stretch Fabric
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EC120 Full Course Notes
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Document Summary
Economics: is the study of the allocation of scarce resources, which are resources with alternative uses (food, time etc) Microeconomics: deals with with the study of; households, firms, markets and relative prices. Macroeconomics: studies economic aggregates such as; inflation, unemployment and economic growth. Positive statements: are statements about what is or what will be and can be verified by appealing to facts. Normative statements: are statements about what ought to be, involve value judgments and cannot be verified by facts. Economic theory: use simplifying assumptions to make predictions. Opportunity costs: are the costs of using resources for a particular purpose measured by the benefit of not using them in their next best alternative use, Costs incurred for all courses of action. A firm/person should engage in activity a if the benefits of a exceed the opportunity cost of a . Therefore opportunity cost has fallen: suppose you lose your concert ticket on the way to the concert.
