ECO-2023 Lecture Notes - Lecture 4: Fallacy, Nirvana Fallacy, Ceteris Paribus
Document Summary
What to analyze: life expectancy, health. Economics is the science of how we make choices under scarcity. Choice - the act of selecting among alternatives. Scarcity- the concept that there are fewer things freely available from nature than people would like (time, money, cars) Trade-offs are necessary in a world w/ unlimited desires and limited resources. Rationing- allocating scarce goods to those who want them. In a market economy, prices are used to ration goods. Resources: an input used to produce an economic good: human resources (human capital, physical resources (physical capital, natural resources. Capital- human-made resources used to produce other goods and services. Guideposts of economic thinking: resources are scarce so decision makers must make trade-offs (no such thing as free lunch) Opportunity cost- the highest valued alternative that must be sacrificed when choosing an option. Ex: how you spend your next or last . Individuals are rational - they try to get the most from their limited resources.
