ECON 1BB3 Chapter Notes - Chapter 1: Marginal Cost, Opportunity Cost, Externality

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Krishnakali Sen Gupta

Document Summary

Scarcity: means that society has limited resources and therefore cannot produce all the goods and services that people wish to have. Just as every household cannot give every member what he/she wants, a society cannot give every individual what he or she aspires. Economics: the study of how a society manages its scarce resources. Efficiency: society getting the most it can from its scarce resources. Equity: property of splitting economic prosperity fairly among members of society. Opportunity cost: whatever must be given up to obtain an item. Rational people: people who systematically and purposefully do the best they can to achieve their objectives. Marginal changes: small incremental adjustments to plan an action. Incentive: something that induces a person to act. (it may be a punishment or a reward) Market economy: an economy driven by the decisions of millions of households and firms. Property rights: the ability of an individual to own and exercise control over scarce resources.