ECON 202 Lecture Notes - Lecture 1: Minimum Railway Curve Radius, Profit Motive, Inverse Relation
Document Summary
We make choices in our own self-interest, which can sometimes promote the social interest (choices that are good for everybody) We live in a world of scarcity, if we had abundant resources there would be no reason for choices. Opportunity cost- measures marginal cost, which is the next best choice that must be given up. Compare cost and benefit; if mb > mc or mb = mc then you will do it. Only the wants of the person making the choice are relevant to its rationality. Determines what gets made, how, and for whom. Benefit: what you gain from something (determined by preferences) Cost: what you give up (determined by marginal cost: the things that you cannot afford to buy (the monetary costs, the things you can"t do with your time. We choose at the margin- choice is not all or nothing (compare the benefit of a little bit more)
