ECO365 Week 1 Prof Comments

ECO365 Week 1 Prof Comments - ECO365 Week 1 Professor...

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ECO365 Week 1 Professor Comments This additional lecture will cover the most important concepts to take away from week 1. These concepts are: opportunity cost, positive and normative economics, demand, supply, equilibrium, price controls, and elasticity. First opportunity cost. Opportunity cost measures what is given up in order to in order to get something else. For example, if you want to work more you forego leisure time or if you want to save more you forego current consumption. Opportunity costs exist because all economic decisions involve tradeoffs. These tradeoffs occur because economic agents have unlimited wants and needs yet resources (land, labor, capital) are fixed. This is defined as the economic problem. All economic decisions involve winners and losers and must be analyzed in terms of cost/benefit analysis. For example, if the costs outweigh the benefits the decision should not be made. Next is positive and normative economics. Positive statements are statements of fact. For example, GDP growth was 3 percent last year. Normative statements are statements of opinion. For example, the rich should be taxed more. Good economic analysis should be objective and avoid using value judgments (ie opinion based). The art of economics is to use positive statements in support of normative statements. This is important because economics is a social science and there is no correct answer to economic problems. Economic issues often include a multi faceted debate with several different arguments. Next is demand.
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This note was uploaded on 03/02/2009 for the course BUS ECO 365 taught by Professor Unk during the Spring '09 term at University of Phoenix.

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ECO365 Week 1 Prof Comments - ECO365 Week 1 Professor...

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