FHCE 2100 Lecture Notes - Lecture 2: Corn Flakes, Opportunity Cost, Market Economy
Document Summary
We learn early in life that we are unable to satisfy our wants. Deals with human society or its characteristic elements: individual, family, state. Study of how a society allocates its limited resources to satisfy unlimited wants. Resources used to produce goods and services for consumption now and later. There are not enough resources to satisfy every possible demand on them. The amount of something available is insufficient to satisfy everyone"s desire for it. Market economy uses prices to signal scarcity. Implies the need for trade-offs - give up one thing in order to get another. The alternative someone gives up when making an economic choice. Using resources one way has the opportunity cost of not being able to use them in another. Outlines how society allocates scarce resources to achieve prosperity and well-being for its citizens. Maximize happiness for society as a whole. Every choice we make involves important elements of scarcity.