ECON 1B03 Chapter Notes - Chapter 1: Opportunity Cost, Market Economy, Invisible Hand
7 Jan 2017
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ECON 1B03 Full Course Notes
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Economics the stud(cid:455) of ho(cid:449) so(cid:272)iet(cid:455) allo(cid:272)ates s(cid:272)ar(cid:272)e resour(cid:272)es to satisf(cid:455) so(cid:272)iet(cid:455)"s u(cid:374)li(cid:373)ited wants. Scarcity means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Microeconomics focuses on the individual parts of the economy. Market economy allocates resources through the decentralized decisions of firms and households: no major people telling us what to do. Economic rationality systematically and purposefully using information to make the best decisions for oneself to a(cid:272)hie(cid:448)e o(cid:374)e"s o(cid:271)je(cid:272)ti(cid:448)es. Perfect information everyone knows everything with no uncertainty. Asymmetrical information someone knows more about something than someone else. Resource anything that can be used to make something else: aka: factors of production or inputs, big 4 resources: labour, land, capital, and entrepreneurship. Get one thing, usually have to give up something else. Opportunity cost everything you have to give up to get something else: cost of best foregone alternative.
