ECON103 Lecture Notes - Lecture 1: Opportunity Cost, Human Capital
10 Feb 2016
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Document Summary
Social science concerned with making optimal choices under conditions of scarcity. Opportunity cost- the next best alternative that has been sacrificed. There"s no free lunch- everything has an oc. Individual seek to maximize utility (pleasure, happiness, satisfaction) Firms seem to maximize profit through the production of goods and services that people chose to purchase. The desired outcome of human behavior is to increase utility/profit-desired results are not always obtained. Marginal benefit is the satisfaction or value desired from 1 additional unit of anything. Marginal cost is the cost of an additional unit. Marginal means extra or 1 more of something. Comparison between mb&mc-people choose to do something when the mb exceeds. Scientific method: observe, formulate hypothesis, test the hypothesis, accept, reject/modify hypothesis, continue to test hypothesis if necessary. Economic principle- generalizations about economic behavior or the economy. Macroeconomics-study of the economy or a major aggregate of the economy. Microeconomics- study of the individual, consumer, firm or market.
