Week%201%20Lecture%20-%20HO

Week%201%20Lecture%20-%20HO - BASIC PRINCIPLES OF ECONOMICS...

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ECONOMICS: Study of how society manages scarce resources WHAT Goods and Services will be produced. HOW will these Goods and Services will be produced. WHO will receive and consume these Goods and Services Micro economics versus Macro economics Decision Making by Individual Firms and Households; Interaction of Firms and Households in Markets for specific goods Study of aggregate production and growth; Unemployment; Inflation BASIC PRINCIPLES OF ECONOMICS
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Scarcity: Our WANTS exceed our MEANS “I want to make A’s in all of my classes, spend a lot of time with my family and friends, buy a new car, new clothes, dinners out in the finest restaurants, learn to play an instrument really well, retire before I reach the age of 50, ……. .” Society must also make choices: Principle 1: People Face Tradeoffs
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Opportunity Cost: “There is no such thing as a free lunch” Opportunity Cost of a College Education: Principle 1: The cost of something is what you give up to get it
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GPA Social Life Production Possibilities Frontier: Combinations of Social Life and GPA a student can reach if he/she uses her available resources efficiently.
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“Guns” “Butter” Society at large also faces tradeoffs. We can have more “Butter” (Peacetime Goods) only if we reduce the resources devoted to producing “Guns” (National Defense).
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Week%201%20Lecture%20-%20HO - BASIC PRINCIPLES OF ECONOMICS...

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