L11 Econ 1011 Lecture 1: Thinking Like an Economist
27 Aug 2015
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Economics: the study of how people make choices under conditions of scarcity and of the results of those choices for society. Scarcity principle: although we have boundless needs and wants, the resources available to us are limited. So having more of one good thing usually means having less of another. Cost-bene t principle: an individual (or a rm or a society) should take an action if, and only if, the extra bene ts from taking the action are at least as great as the extra costs. Rational person: someone with well-de ned goals who tries to ful ll them as best as they can. Economic surplus: the bene t of taking an action minus its cost. Abstract model: simpli ed description that captures the essential elements of a situation and allows us to analyze them in a logical way. Most would make the trek for the video game, but not the laptop because in the.
