ECON 200 Lecture Notes - Lecture 1: Win-Win Game, Opportunity Cost, Full-Size Car

• School: UW
• Department: Economics
• Course: ECON 200
• Professor: Haideh Salehi-Esfahani

Document Summary

We rely on market exchange for everything that we do. Interactions in an economy are positive sum game (all parties involved may gain) It employs a set of thinking tools that help explain our economic and social phenomena and also predict the effects of changes in (relevant) constraints on the social and economic outcomes. Theory is supported by facts, observations, empirical investigations etc. A theory contains refutable proposition, a claim that can turn out wrong or right. The fundamental axiom in economics (concerning resources) is: scarcity. Scarcity implies a choice or a decision on how we use our resources. Opportunity cost is the value (benefit) of a next best alternative forgone. The value of what you give up essentially is the opportunity cost. If there is no other alternative, then the answer is that there is no opportunity cost. Ex: you purchase a concert ticket for . Someone offers you on the evening of the event but you refuse.