BU111 Lecture Notes - Lecture 2: Opportunity Cost
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BU111 Full Course Notes
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Ec120 - fall 2017 - class 2 summary. The second lecture focuses on how economists analyze problems. As such, we will look at the di erent types of questions that economists try to answer, and introduce our rst model, the production possibility frontier (ppf). The ppf is an ideal model to understand the concept of opportunity cost, along with feasibility and our rst concept of economic e ciency. A critical point for students to remember is that e cient is not synonymous with good. An e cient outcome may be undesirable for many reasons. The reason to de ne e ciency is that when an outcome is ine cient, that often identi es a dimension along which the outcome can be improved. We will return to this point throughout the course. Students should read through chapters 1 and 2 before the lecture (focus on pp4-7 and p. 25), and (if possible) complete the dynamic study module: basic principles of economics.
