Macroeconomics Notes - Opportunity Cost/ Economic growth
Macroeconomics Notes - Opportunity Cost/ Economic growth 13022
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This 3 page Class Notes was uploaded by Dwayne Young on Thursday January 21, 2016. The Class Notes belongs to 13022 at Georgia State University taught by Brian Hunt in Spring 2016. Since its upload, it has received 84 views. For similar materials see Principles of Macroeconomics in Economcs at Georgia State University.
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Date Created: 01/21/16
ECON NOTES HOW INDIVIDUALS MAKE CHOICES Basic principles behind the individual choices 1. Resources and Scarce 2. the real cost of something is what you must give up to get it – Opportunity cost It is all about what you have to forgo to obtain your choice Things we have to take advantage of 1. Land 2. Labor 3. Capital CONTINUED FROM LAST WEEK 1/20/16 Every country has scarce resources, and are ﬁnite.They are grouped into three different categories which are: Land, Labor, and Capital - you have to come to a consensus of how to make every resource work for you, or how to maximize each resource. Scarcity of Oil Resources (2006) – Since 2006, from what you know how has the scarcity of global oil resources changed? Using the concept of opportunity cost, consider reasons why we would never run out of oil? 1. “How much?” is a decision at the margin – Trade offs – Marginal decisions and marginal analysis 2. People usually take advantage of opportunities to make themselves better off. – Incentives; people make trade offs because they have an incentive, they take advantage of opportunities to exploit scarcity. On a typical day in Lagos, it is constantly congested in the marketplace. What type of scarcity is scarcity is created in that Marketplace? Space. This created an opportunity for people to meet and settle transactions and make formal/ informal agreements. – They are innovating how to get to one another – Coming together to create more opportunity cost, and spreading the resources. Before organizing a market there are some important questions to ask ﬁrst... There are many questions that have to be answered in how best to organize an environment that will create numerous exploitable opportunities using ﬁnite resources available. At the core of addressing resource and opportunity scarcity are four basic questions asked ﬁrst by an economy’s participants. The questions are: 1. What will be produced? 2. How will it be produced? 3. Who will produce it? 4. For whom will it be produced? “Wealth is stock: what we own, what we produce, and what we sell in order to put into a stock so we can redistribute to make a ﬁnancial gain.” A mixed market place should be function along four tenets: 1. Serve as a medium to coordinate activities in response to private and public incentives signaling unlimited needs and wants in a resource constrained environment. 2. Serve as a medium for the allocation of scarce resources through the use of a pricing mechanism (regulated or non-regulated) or adoption of some acceptable private and/or public practice 3. Making use of a pricing mechanism for the allocation of scarce resources or adoption of some type of acceptable private or public practice for the allocation of resources---land, labor, and capital---to persons or entities that will make for the most productive use of such resources 4. Create exploitable trade and exchange opportunities for participants that will maximize private and public gains and returns to society.
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