BUS 3000 Lecture Notes - Substitute Good, Lincoln Near-Earth Asteroid Research, Opportunity Cost

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Alfred marshall, the founder of modern microeconomics in 1890, defined economics as. The textbook definition uses the most important terms in microeconomics scarcity, choice, resource, allocation, and wants but also contains the assumption that human wants are unlimited. This approach follows from the understanding of an economic good as scarce; i. e. , one for which wants (demand) are greater than the availability quantity (supply). If quantity is greater than wants such as for oxygen, there is no scarcity and thus no problem of allocation among choices. The statement that wants are unlimited ensures that there will always be economic goods since wants will always expand faster than our technological ability to satisfy them. Economic theory begins with clear definitions and simplifying assumptions and then proceeds by logic to conclusions about economic relationships. This approach appears definitive in its abstraction but is based on years of empirical observation and debates.

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