ECON 1B03 Lecture Notes - Lecture 1: Opportunity Cost, Rationality, Planned Economy

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Aleksandra Gajic

Document Summary

Introduction to microeconomics: focuses on individual parts of economy, scarcity: unlimited wants, resources (factors of production): Economic rationality: rational people: use info they have to consider costs and bene ts of some action, perfect information: knowing everything you need to know with certainty, asymmetric information: one person has more info than the other. Marginal thinking: rational people making marginal changes (small incremental change to an existing plan) Opportunity cost: cost of something is what you give up to get it, cost of best forgone alternative. Example: tuition: , books: , apartment: . Value of best foregone alternative lost wages: total opportunity cost of attending mac: explicit cost + implicit cost = 13,000 + 28,000 = ,000, when given two prices (comparisons) take difference of comparisons. What is a market: where buyers and sellers meet to buy/sell goods (physical place, online)