ECON-1006EL Chapter Notes - Chapter 1: Opportunity Cost
16 Oct 2015
School
Department
Course
Professor
Document Summary
The more we have the more we want, why scarcity is an issue. Scarcity implies that choices must be mad, and making choice implies the existence of costs. The bene t given up by not using them in the best alternative way. Production possibility curve divides points outside the graph which represent unattainable combinations, points inside attainable. Cost of beer is , or two pizzas. Two slices of pizzas is the opportunity cost of one beer. Every time a choice is made, opportunity costs are incurred. Opportunity cost- more of one good, less of another. Straight line boundary indicates that the opportunity cost of one good stays constant. Curved line represents increase of either good as amount increases. The study of the causes and consequences of the allocation of resources as it is affected by the workings of the price system and government policies that seek to in uence it.
