ECON 1B03 Lecture Notes - Lecture 1: Tim Hortons, Market Economy, Invisible Hand
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14 Mar 2016
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Study of how society allocates scarce resources to satisfy peoples" unlimited wants: scarcity. Means that society has limited resources and therefore cannot produce all the goods & services people wish to have. Focuses on the individual parts of the economy. Households for irms and how they make decisions. Eg. inlation, unemployment, interest rate: microeconomics, macroeconomics, market economy: Allocates resources through the decentralized decisions of irms and households. Households decide what to buy, who to work for . Irms decide who to hire and how much to produce . Basic principles of economics: every economic issue involves individual choice, households: At what price should goods be sold: we assume that when people are making decisions, they are acting rationally, economic rationality: Systematically and purposefully using information to make the best decisions for oneself to achieve one"s objectives: perfect information, asymmetrical information: When someone knows more about something than does someone else.
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