ECN 104 Lecture Notes - Opportunity Cost, Decision-Making, Full Employment
24 Oct 2013
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Choice made by weighting the marginal (extra) costs & marginal benefits. As favorable accumulate, the hypothesis evolves into theory/model. Observe, formulate a hypothesis, test by comparing hypothesis to results, accept/reject/modify hypothesis, continue testing. Generalizations: economic principles (ie: price decreases =consumption increases) Other things equal assumption ie: sale of coke 1) price increase = quantity demand decreases: temperature increases = sales does not decrease/increases. Microeconomics examines individual units (household, firm or industry) Involving value judgment about what the economy should be like. There should not be any poor people in canada (cannot be tested) Make the best choice possible, given your preference & income. Human resources scarce resources land/natural resources capital: capital gross (manufacturing aids, factories, storage, machinery, etc) Entrepreneurial ability, takes initiative, makes policy decisions, innovative, bears risks. Full employment & productive efficiency (lowest cost of production) fixed resources, fixed technology, two goods (ie: pizza = consumer goods, industrial robots = capital goods.
