BUSS1040 Lecture 1: Lecture 1 (Ch14) - Key Concepts and Gains from Trade

• School: University of Sydney
• Department: Business Studies
• Course: BUSS1040
• Professor: Katrien Stevens

Document Summary

Lecture 1 (ch1/4) - key concepts and gains from trade. Economics = the study of choice under scarcity. Scarcity is faced by consumers, businesses, governments, countries and so on --> need to make choices. I(cid:374) a (cid:373)ode(cid:396)(cid:374) e(cid:272)o(cid:374)o(cid:373)(cid:455), these (cid:395)uestio(cid:374)s a(cid:396)e t(cid:455)pi(cid:272)all(cid:455) (cid:396)esolved i(cid:374) the (cid:858)(cid:373)a(cid:396)ket(cid:859). A market = place where buyers and sellers of a particular good or service meet. Markets can look quite different (traditional bazaar, an online trading site, an auction) Eve(cid:374) i(cid:374) (cid:373)a(cid:396)ket e(cid:272)o(cid:374)o(cid:373)ies, gove(cid:396)(cid:374)(cid:373)e(cid:374)ts pla(cid:455) a (cid:272)(cid:396)iti(cid:272)al (cid:396)ole i(cid:374) (cid:373)a(cid:396)kets (cid:271)e(cid:272)ause of (cid:862)(cid:373)a(cid:396)ket failu(cid:396)es(cid:863) a(cid:374)d/o(cid:396) dist(cid:396)i(cid:271)utio(cid:374)al issues. fo(cid:396) e(cid:454)a(cid:373)ple, (cid:271)(cid:455) i(cid:373)posi(cid:374)g (cid:396)egulatio(cid:374)s a(cid:374)d ta(cid:454)es. Our focus is on the behaviour of individuals (consumers, firms, government) in markets. Marginal benefit = extra unit of benefit for individual. Marginal cost = additional cost of buying one more unit is useful as it allows us to examine the behaviour of individuals in market. Correlation = two or more factors are observed to be move together.