ECON 101 Lecture Notes - Lecture 5: Marginal Utility, Marginal Cost, Normal Good
Document Summary
Inter- temporal efficiency a suitable balance between resources being allocated towards current consumption on the one hand, and saving for financing future investments on the other. The two goals are considered to be incompatible. Resources can only be allocated to achieve one of them (i. e. whatever the initiative is, one will benefit while the other is hindered). Must be able to be tested and proved/disproved. Economics is concerned with positive analysis rather than normative as positive analysis measures the costs and benefits of different courses of actions. Normative subjective and opinion based and is concerned with what ought to be. Involves making value judgements that can"t be tested or proved/disproved. Individuals should receive reductions in taxation, as they are able to decide how to spend money to maximise their satisfaction better than the government. The ppf and the concept of opportunity cost can be used to explain the economic gains from specialisation and trade.
