· Scarcity defines the American economy
o All economics come from this principle
o People must make decisions when faced with scarcity
· People face tradeoffs
o Rizzo: “There ain’t no such thing as a free lunch”
· o People and societies are always making tradeoffs to balance monetary, physical, time, etc. balancing
o For something to be truly free, you must produce and consume it without sacrificing any resources or capital
o Cost: no concrete definition, but essentially the overall value we put in obtaining a good
· Opportunity Costs
o An opportunity cost is The net benefit you would have gotten from your next biggest opportunity
o The gain you forego when you make a choice.
o Lebron James choosing to skip college is an example of an opportunity cost, for he valued the money obtained from four years of basketball over the college education he would have received in college
· The Broken Window Fallacy
o A common economic idea is that a natural disaster, such as the tsunami that hit Japan, helps invigorate the economy
o False on the basis that the money spent repairing the damage of the disaster could have been used elsewhere to help the economy
No comments:
Post a Comment