ECON 25100 Lecture Notes - Lecture 1: Opportunity Cost, European Cooperation In Science And Technology

• School: Purdue University
• Department: Economics
• Course: ECON 25100
• Professor: Blanchard Kelly

Document Summary

Microeconomics - focused on individual consumers, firms, households, and government influence and their interactions. Two kinds of analysis : normative analysis - opinion based on judgement, positive analysis - factual opinion. Scarcity - available resources are insufficient to satisfy wants. Economic resources: land(natural resources) - ex. coal, trees, oil, labor, capital - buildings, equipments, machinery, entrepreneurship. Incentives - rewards/penalties that encourage/discourage an action. If benefits(rewards) > costs(penalties) ===> do it. If benefits(rewards) < costs ===> don"t do it. Economic cost/ opportunity cost - value of the best alternative. Implicit costs - value of forgone costs. If job 1 is picked, benefit = ,000. Opportunity cost = ,000(value of the best alternative) Sunk cost - cost that you incur, no matter what decision you take. Marginal benefit(mb): benefit of one additional unit of a good. Marginal cost(mc): cost of one additional unit of a good. If mb > mc -> increase the quantity. If mb < mc -> decrease the quantity.