[ECON 1B03] - Final Exam Guide - Everything you need to know! (73 pages long)

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ECON 1B03 Full Course Notes
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ECON 1B03 Full Course Notes
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Economics: the study of how society allocates scarce resources to satisfy society"s unlimited wants. Scarcity: society has unlimited resources and therefore cannot produce all the goods and services people wish to have. Have to make decisions on how to allocate scarce resources. Microeconomicsl focuses on the individual parts of the economy: how households and rms make decisions and how they interact in speci c markets. Macroeconomics: looks at the economy as a whole: economy-wide phenomena, including in ation, unemployment, and economic growth. Market economy: allocates resources through the decentralized (no major decision maker) decisions of rms and households: households decide what to buy and who to work for, rms decide who to hire and what to produce. We assume that when people make decisions, they are acting rationally. Economic rationality: systematically and purposefully using information to make the best decisions for oneself to achieve one"s objective. Perfect information: everyone knows everything with no uncertainty.

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