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(Jan. 9) Ch. 1: what is economics - Coggle Diagram
(Jan. 9) Ch. 1: what is economics
practically, this course is about: how individuals make decisions with the desires they have, with limited resources
also talks about societal outcomes
economic way of thinking
consumers are forced to make choices
because of scarcity
opportunity costs
: weighing the pros and cons
for example, if you're sleeping, you're losing the opportunity to play sports at that moment
important to ask "what did you have to give up" before or even after making a choice
thinking about the cost of what you didn't do
valuing what you're giving up
every choice we make has opportunity costs - the idea that we have to give up something to choose something (else)
people try to make rational decisions by weighing the gains and losses of a choice
benefit
cost
"most choices are made at the
margin
"
comparing between the
marginal benefit
and
marginal cost
making choices based on an evaluation of where you are, and where you could be
for example: considering whether you should study for another hour
study of economics uses the scientific method, like other sciences
observing, hypothesis, experimentation, modification, conclusions, etc.
economists distinguish between two types of statements
positive statement
: what is
fact
can be tested by checking the statement against facts
normative statement
: what ought to be
opinionf
cannot be tested for truth