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

• School: McMaster University
• Department: Economics
• Course: ECON 1B03
• Professor: Hannah Holmes

Document Summary

The study of how society allocates scarce resources to satisfy unlimited wants. Means that society has limited resources and therefore cannot produce all the goods and services people wish to have. Allocates resources through time decentralized decisions of firms and households: households decide what to buy and who to work, firms decide who to hire and how much to produce. Systematically and purposefully using info to make the best decisions for oneself to achieve one"s objectives. When someone knows more about something than does someone else: ex. Car salesman knows if a car is bad. Anything that can be used to make something else. The big 4 resources: labour, land, capital, entrepreneurship. Everything you have to give up to get something else. The cost of the best forgone alternative. Explicit cost (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1) (cid:1)