SOC 3650 1st Edition Lecture 2Current Lecture- All individuals and societies face scarcity- Scarcity- A situation in which unlimited wants to exceed the limited resources available to fulfill those wantso Ex) Time: everyone faces this scarcity- Due to scarcity, when we choose something, we must give up something else. This is called the opportunity cost- Opportunity Cost- The highest-valued alternative that must be given up to engage in an activityo Ex) Abby chooses to study instead of playing soccer. Her opportunity cost is the enjoyment she would have gained from playing soccer.- Economics- The study of the choices people and firms make to attain their goals given the scarcity of resources in the economy.o Macro- Deals with the performance, structure, decision making, and behavior of an economy as a wholeo Micro- Deals with the performance, structure, decision-making, and behavior of individual markets- Incentives- Factors that motivate people to make a particular choiceo Ex) Getting a good grade on a test is an incentive to studyo Public policy may rely on incentives to change people’s behavior and it may lead to unattended consequences if it inadvertently changes incentiveso Incentives also play a role in various Economic Models- Economic Models- simplified versions of reality used to analyze real world economic situations- Economists and other scientists make unrealistic assumptions when they build models inorder to simplify our complicated world enough that they can understand and analyze problems and accurately answer questionso Ex) A production possibility frontier may assume that two firms only make two goods. While it is unrealistic to assume these firms ACTUALLY only produce two goods, it simplifies the model so it is easier to economists to understand what is going on.- Positive Statement- Descriptive statements that can be evaluated as true or false using only datao Ex) The company’s sales improved by 6% after they fired Harold These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- Normative Statement- Prescriptive statements that involve personal values (or opinions).They cannot be evaluated as true or false using only datao Ex) The government SHOULD lower