ECON101 Chapter Notes - Chapter 2: Root Mean Square, Opportunity Cost

• School: University of Alberta
• Department: Economics
• Course: ECON101
• Professor: Alexander Gainer

Document Summary

Chapter 2: how to think like an economist. Scientist: tries to explain how the world works. Assumptions: simplify the real world making it easier to explain issues. Model: highly simpli es representation of a more complicated reality, used when studying economic issues. Households: own factors of production and sell/rent them to rms for income, buy and consume g&s. Firms: buy or hire factors of production and use them to produce g&s, sell g&s. Ppf and opportunity cost: moving along the ppf line involves shifting resources like labour from the production of on good to another, society faces a tradeo between the two goods, slope of ppf = opportunity cost. Microeconomics: examines how a households and rms make choices and how they interest in a market: how much does one person want to spend or save. Macroeconomics: examines the economy as a whole: in ation, unemployment and economic growth. Positive statement: something you can test/prove: unemployment rate is 4%