ECN 104 Chapter Notes - Chapter 1: Capital Good, Budget Constraint, Opportunity Cost
23 Feb 2017
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Document Summary
Three categories of 10 key concepts: concepts that pertain to individual, concepts that explain interaction among individuals, concepts that deal with economy as a whole and standard of living. Interaction among individuals: specialization and trade: improves well-being of all participants, market effectiveness: good job at co-ordinating trade among individuals, groups and nation by market, role of government: gov"t occasionally improves the co-ordinating function of markets. Economic perspective: a viewpoint where rational decisions are made by comparing marginal benefits and marginal costs with associated actions. Scarcity: limits placed on amount and types of goods and services available for consumption because of limited resources to produce output. Opportunity cost: amount of other products that must be forgone or sacrificed to produce a unit of product. No free lunch because there will always be a cost. To get more of one thing, must sacrifice something else. People make decisions with some desired outcome in mind.
