ECN 204 Chapter Notes - Chapter 1: Full Employment, Marginalism, Opportunity Cost
28 Jun 2018
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Department
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Professor
ECN – Chapter 1 – Limits, Alternatives and choices
Economic perspective – economic way of thinking
Scarce economic resources mean limited G and S
Opportunity costs – to obtain more of one thing, society forgoes the opportunity of getting the
next best thing
Utility – the pleasure, happiness or satisfaction obtained from consuming a G or S
Marginal analysis – comparisons of marginal benefits (MB) and marginal costs (MC), usually for
decision making
Marginal – extra, additional or “a change in”
Scientific method – observing real world behaviour and outcomes, formulating possible
explanations, testing explanations, accepting/rejecting hypothesis, continuing to test
Other things equal assumption – the assumption that factors other that those being
considered do not change
Microeconomics – part of economics concerned with decision making by individual customers,
workers, households and business firms
Macroeconomics – examines either the economy as a whole or its basic subdivisions or
aggregates (such as the government, household or business sectors)
Aggregate – a collection of specific economic units treated as if they were one unit
Macroeconomics speaks of such economic measures as total output, total employment, total
income, aggregate expenditures and the general level of prices in analyzing various economic
problems
Positive economics – focuses on facts and cause-and-effect relationships
Normative economics – incorporates value judgements about what the economy should be like
or what particular policy actions should be recommended to achieve a desirable goal
Economizing problem – the need to make choices because economic wants exceed economic
means
Limited income, unlimited wants
Budget line – schedule or curve that shows various combinations of two products a consumer
can purchase with a specific money income
A consumer’s budget line – budget line shows all the combinations of any two products that
can be purchased given the prices of the products and consumers income
Economic resources – all natural, human and manufactured resources that go into the
production of G and S
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Ecn chapter 1 limits, alternatives and choices. Scarce economic resources mean limited g and s. Opportunity costs to obtain more of one thing, society forgoes the opportunity of getting the next best thing. Utility the pleasure, happiness or satisfaction obtained from consuming a g or s. Marginal analysis comparisons of marginal benefits (mb) and marginal costs (mc), usually for decision making. Marginal extra, additional or a change in . Scientific method observing real world behaviour and outcomes, formulating possible explanations, testing explanations, accepting/rejecting hypothesis, continuing to test. Other things equal assumption the assumption that factors other that those being considered do not change. Microeconomics part of economics concerned with decision making by individual customers, workers, households and business firms. Macroeconomics examines either the economy as a whole or its basic subdivisions or aggregates (such as the government, household or business sectors) Aggregate a collection of specific economic units treated as if they were one unit.
