lecture 3

Question 1

what is scarcity?

Answer 1

someone or something faces a constraint.
everyonne faces constraints , they have to make choices

Question 2

what are the key elements for a decision maker?

Answer 2

objectives (what we want to achieve),
constraints (defie which action are feasible),
decision process (how objectives ad constraints are taken into account to produce an action) → it gives you the best option given everything

Question 3

what happens when resources are scare?

Answer 3

The decision to do one thing necessarily implies that
something else doesn’t get done
Every choice has a cost

Question 4

What is opportunity cost?

Answer 4

value of what must be forgone (abandoned) to undertake an activity or the forgone (abandoned) value of the next-best alternative