Business Administration - Accounting & Financial Planning ECN502 Chapter Notes - Chapter 2: Productive Efficiency, Opportunity Cost, Free Lunch
28 Oct 2016
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Chapter 2 the economic problem: scarcity and choice. You cannot choose something without giving up something else: buy (cid:862)(cid:272)oke(cid:863) gi(cid:448)e up (cid:862)(cid:373)o(cid:374)ey(cid:863) 1 dvd: scarcity force -> choice results in -> opportunity costs, scarcity forces choice, which results in opportunity costs. Cost-benefit approach is an analysis in decision making that involves the comparison of costs and benefits. If the benefits outweigh the (cid:272)osts, the(cid:374) do the a(cid:272)ti(cid:448)ity; other(cid:449)ise do(cid:374)"t: example: college vs full-time job (,000/year) College = diploma = higher paying job, job security, high pay vs = ,000. A(cid:374) e(cid:272)o(cid:374)o(cid:373)y"s produ(cid:272)tio(cid:374) possi(cid:271)ilities sho(cid:449) it"s pote(cid:374)tial to produ(cid:272)e goods a(cid:374)d ser(cid:448)i(cid:272)es (cid:449)ith it"s resour(cid:272)es (cid:894)a(cid:448)aila(cid:271)le(cid:895) Table 2. 1 a production possibilities schedule showing constant costs. Production possibilities (p-p) schedule is a table showing various combinations of goods. 9 and services that can be producted with full utilization of all resources and a given sate of technology: shows various combinations of goods and services.
