Econ Chapter 1

Econ Chapter 1 - Chapter 1 What is Econ Economics study of...

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Chapter 1: What is Econ? Economics: study of choice under conditions of scarcity I. Scarcity and Individual Choice As individuals, we face a scarcity of time and spending power. Given more of either, we could each have more of the goods and services that we desire. Scarcity leads us to make choices: scarcity of time Ex: studying, sleeping etc A. Concept of Opportunity Cost opportunity cost: any choice is what we must forego when we make that choice when the alternatives to a choice are mutually exclusive, only the next best choice- the one that would actually be chosen- is used to determine the opportunity cost of the choice for many choices, OC is the money sacrificed I. An Example: The Opportunity Cost of College explicit costs: dollars sacrificed- an actually paid out- for a choice (ex: books, tuition) implicit costs: value of something sacrificed when no direct payment is made ex: time if we go to college, we sacrifice foregone income (income earned at a job)
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Econ Chapter 1 - Chapter 1 What is Econ Economics study of...

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