Economics A100 Lecture Notes - Lecture 4: Kobe Bryant, Tom Hanks, Optimal Decision
15 May 2020
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Opportunity cost: the loss of potential gain from the alternatives. Scarcity: not enough resources to satisfy people"s needs and wants. Cast away (tom hanks movie: no resources on the island. Economics: study of the choices that people make to attain their goals from their scarce resources. Economic model: simplified version of real world economic situations. Definition: a group of buyers and sellers of goods and services. People are rational: if something is on sale, people will most likely buy it because we make rational decisions. Optimal decision are made at the margin: margin: one extra unit. Marginal analysis: analysis that involves comparing marginal benefits and marginal costs: marginal benefits: fun to watch movie, marginal costs: ticket price, benefits > costs: you go to the movie, economic problem that society must solve. Trade-off: producing more of one good or service means producing less of another good and services.
