ECN 204 Lecture Notes - Lecture 4: Ceteris Paribus, Opportunity Cost, Fallacy
21 Feb 2017
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1. 1 ten key concepts to retain for a lifetime. Interactions among individuals: facing trade offs, opportunity costs, choosing a little more or. Less: the influence of incentives, specialization and trade, the effectiveness of. Standard of living: money & inflation, inflation-unemployment. The economy as a whole and the standard of living. Scarcity of economic resources restricts options and requires choices. The opportunity cost of a choice is what forgone for that choice. Formulating a hypothesis based of those observations. Testing this hypothesis by comparing the actual outcomes to the hypothesis predictions. Accepting , rejecting or modifying the hypothesis. Continuing to test the hypothesis against the facts. Microeconomics : examines individuals units (households, firm or industry) and their decision making. Macroeconomics : examines the whole economy and the subdivisions or aggregates. Positive economics : the analysis of facts to establish cause-and-effect relationships. Normative economics : the part of economics involving value judgements about what the economy should be like.
