Microeconomics and Constrained
Optimization Notes:
Market Failures and Imperfect
Information
Externalities & Public Goods: when
social benefits/costs aren't reflected
in market prices
o Positive Externalities: spillover
benefits
o Negative Externalities: spillover
costs
o Public Goods: non-excludable, non-
rivalrous goods
Opportunity Cost and Trade-Offs
Opportunity Cost: the value of the
best alternative given up
Trade-Offs: making decisions by
comparing opportunity costs
The Dismal Science: Economics and
Trade-Offs
Economics studies how individuals
and societies manage scarce
resources
Trade-Offs: giving up something to
get something else
Optimization Notes:
Market Failures and Imperfect
Information
Externalities & Public Goods: when
social benefits/costs aren't reflected
in market prices
o Positive Externalities: spillover
benefits
o Negative Externalities: spillover
costs
o Public Goods: non-excludable, non-
rivalrous goods
Opportunity Cost and Trade-Offs
Opportunity Cost: the value of the
best alternative given up
Trade-Offs: making decisions by
comparing opportunity costs
The Dismal Science: Economics and
Trade-Offs
Economics studies how individuals
and societies manage scarce
resources
Trade-Offs: giving up something to
get something else
