Week 1 — Scarcity, Opportunity Cost, the PPF & Economic Models

Why this matters

A nursing student weighing an extra shift against a night of study and a city council choosing between a new park and repaired roads face the same question: what does this choice really cost?

In plain language

Economics is the study of how people choose when they cannot have everything they want. This week starts with scarcity (having fewer hours, dollars, and other resources than your wants call for), so every choice has an opportunity cost (the value of the best option you gave up to make it). You will draw your first economic picture, the production possibilities frontier (a graph of every pair of amounts of two goods an economy can make when it uses all of its workers well). A concert ticket priced at 60 dollars can really cost you 120 dollars once you count the 4 hours of pay you skip. You will also learn to tell a claim you can check with evidence from a claim about what people ought to do.

• This week: scarcity, opportunity cost, the production possibilities frontier, how economists model, and positive versus normative statements.
• How they connect: this is the foundation; every later week prices choices this way.
• Where we're going next: Week 2, Comparative Advantage, Specialization & the Gains from Trade.

Focus

What does a choice really cost, and what can a whole economy make with what it has?

By the end of this module, you should be able to:

• [ ] price a choice by its opportunity cost, time included
• [ ] read the cost of one good off a frontier and explain its bow
• [ ] classify combinations as on, inside, or outside a frontier
• [ ] label a statement positive or normative

To-do

Plan your week

1. Read Chapter 1 (~35–45 minutes), then the lecture and slides.
2. Work the lecture tutorial (60–90 minutes).
3. Work the practice set (15–25 minutes).
4. Do the Model Workshop (about 90 minutes), the discussion, and the assignment.
5. Take the quiz.

This week's checkpoint: price the concert evening and say why it costs more than the ticket.

You've got this

Take it in order, and ask your instructor if a step snags.

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