ECN 001A Lecture Notes - Lecture 1: Opportunity Cost
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ECN 001A Full Course Notes
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Economics: the study of how society manages its scarce resources, e. g. principle 1: people face tradeoffs. Going to a party the night before your midterm leaves less time for studying. Efficiency: when society gets the most from its scarce resources. Equality: when prosperity is distributed uniformly among society"s members. Taxes generally reduce market efficiency (i. e. , dead weight loss) Taxes are used to support a range of goods and services. Principle 2: the cost of something is what you give up to get it. Making decisions require comparing the costs and benefits of alternative choices. The opportunity cost of any item is whatever must be given up to obtain it. Goi(cid:374)g to (cid:272)ollege for a year is (cid:374)ot just the tuitio(cid:374), (cid:271)ooks, a(cid:374)d fees, (cid:271)ut also the forego(cid:374)e wages. Seei(cid:374)g a (cid:373)ovie is (cid:374)ot just the pri(cid:272)e of the ti(cid:272)ket, (cid:271)ut the value of the ti(cid:373)e you spe(cid:374)d i(cid:374) the theater.
