Econ 1 924927

Econ 1 924927 - ECON 1 Lecture Notes 09/24 09/27/10 What...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
ECON 1 Lecture Notes 09/24 – 09/27/10 What does Economics Study? - Fundamental econ problem: resources are scarce - Scarcity: society has limited resources and therefore cannot produce all the goods and services people wish to have - Economics studies how the society manages or allocates its scarce resources Two Subfields of Economics - Microeconomics o Study of how households and firms make decisions and how they interact in specific markets and industries - Macroeconomics o Study of econ-wide phenomena o Inflation, unemployment o More broad Tradeoffs - People face tradeoffs o To get one thing, people need to give up another - What are the tradeoffs faced by the following? o A member of congress deciding how much to spend on national parks If you spend money on parks you might not be able to spend $$ on other things like national defense o Your friend Henry treats you to a movie You spend time to go to the movie with him – that hour could be used for something more interesting to you Opportunity Cost - Opportunity cost: the value of the next best alternative that must be foregone in order to undertake an activity. - When you undertake an action there are many other things you could possibly do. The opportunity cost of that action is the value of the next best alternative. Opportunity Cost: Example - You just won a free ticket to see Usher concert tonight. You can’t resell it. Lady Gaga is performing on same night and her concert is the only other activity u are considering. Gaga ticket costs $100 and on any given day you would be willing to pay $120 at most to see her perform. There is no other cost involved. What is the opportunity cost of attending Usher concert? o
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/30/2011 for the course ECON 1 taught by Professor Tang during the Fall '08 term at UCSD.

Page1 / 5

Econ 1 924927 - ECON 1 Lecture Notes 09/24 09/27/10 What...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online