Class notes
Econ 1000 Chapter 1 - 7 Notes
- Course
- ECON 1000
- Institution
- Kennesaw State University
This encompasses my notes from Chapters 1 through 7 of Economics 1000.
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Foundations of Economics: CH.1Lecture 1.2
Why Do People Behave in a “Rational Way” [Scarcity]
Scarcity exists when the desire for a good exceeds the amount available from nature. (All scarce goods are Economic Goods)
[What Kind Of Goods Are Scarce?]
A) MOST GOODS, cars, seats in classes, food, houses, medical care, etc.
[What Kinds Of Goods Are NON SCARCE? ] B) Sunshine at noon in the Sahara, Salt Water in the ocean, etc.
Goods Can Move From The “ Free ” Category to the “ Scarce ” Category ->
C) Clean Air, Fish, City Water , etc. (Due To Scarcity The City Changed)
[Rationality]
The ability to set a well-defined goal and take actions to achieve that goal
[What Makes Someone/Something Rational?] A) Rationality
A person moves towards their goal
B) Irrationality
A person moves away from their goal
Rationality (in economics) is not used to judge the desirability of the goal, only whether a person is moving towards it or away from it. This is also known as ACT RATIONALITY. [Self-Interest]
A person is self-interested if he places more weight on the accomplishment of his own goals than on the accomplishment of other’s goals.
Is Self-Interest the same thing as Selfishness? ( Self-Interest pursued beyond legitimate bounds)
Foundations of Economics: CH.1 Continued Lecture 1.3
[ How Does One Achieve A Goal Rationally? ]
Total Benefits
-Total Costs
= Total Economic Surplus
[Rule For Rationality : A Person is behaving rationally whenever
the Total Economic Surplus is maximized, and irrationally when
it isn’t.]
Whenever you change either a cost or a benefit you generate an incentive to rationally change behavior.
Incentives can be either positive or negative. [How Does One Maximize (TES)]
Marginal Benefit : The additional benefit accrued by consuming one more unit of a good
Marginal Cost : The additional cost incurred by producing one more unit of a good.
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