1150 - want those things. The reason that garbage is not...

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www.thinkwell.com [email protected] Copyright 2000, Thinkwell Corp. All Rights Reserved. 1150 –rev 10/26/2000 Defining Economics ! Economics is the study of rational choice under conditions of scarcity . ! Opportunity cost is the best alternative that you give up when you make a choice. Remember that scarcity is an imbalance between what people want and what is freely available. The chart on the left explains the difference between "scarce" and "not scarce." The reason that breathable air and livable space are scarce is that people
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Unformatted text preview: want those things. The reason that garbage is not scarce is that people do not want garbage. Rational choice means people making calculated, self-interested choices after weighing the costs and benefits of those choices. A rational agent chooses the action that is most self-satisfying. All choices come with a cost. The real cost of choosing something is not the money you pay to get it. The real cost is the value of the next-best alternative that you gave up to make the choice you did. This is called the opportunity cost ....
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This note was uploaded on 06/18/2011 for the course ECON 101 taught by Professor Vicek during the Spring '11 term at Parkland.

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