ECON 0100 Study Guide - Summer 2018, Comprehensive Midterm Notes - Wine, The Prisoners, Stretch Fabric
Document Summary
Microeconomics studies how people and firms make decisions and how they interact. Many apartments to choose from, which do you chose from. A resource is anything that can be used to produce something else. Not enough of the resources are available to satisfy all the various ways a society wants to use them. Because resources are scarce, we cannot use them for everything we want. This means we are forced to choose how to allocate resources. Principle 2: the true cost of something is its opportunity cost. Cost of the next best alternative i. e. what someone needs to give up. You can spend your time better than standing in line. Alice is deciding between staying 2 extra hours at work where she would earn. in overtime or going to the movie theatre next door and spending to watch a movie. In both cases, alice expects to spend on parking.
