ECN 104 Lecture Notes - Lecture 1: Budget Constraint, Full Employment, Marginal Utility
Document Summary
Ecn 104 - lecture 1 - limits, alternatives and choice. The economy as a whole and the standard of living. Resources can only be used for one purpose at a time. Only have enough time to do one thing. The cost of any good, service, or activity is the value of what must be give up to obtain it. Rational self-interest entails making decisions to achieve maximum utility. Utility is the pleasure or satisfaction obtained from consuming a good or service. Rational self-interest is not the same as selfishness. Most decisions concern a change in current conditions; therefore the economic perspective is largely focused on marginal analysis. Each option considered weights the marginal benefit against the marginal cost. Whether the decision is personal or one made by business or gov, the principle is the same. The marginal cost of an action should not exceed its marginal benefits. Observe the world (real data, prices, quantities, gdp)
