ECON 101 Lecture Notes - Lecture 2: Marginal Utility, Marginal Cost, Opportunity Cost
78
ECON 101 Full Course Notes
Verified Note
78 documents
Document Summary
They evaluate the consequences of making incremental changes in the use of their resources before deciding. > if marginal benefit > marginal cost, people have an incentive to do more of that activity and vice versa. Economists distinguish between two types of statements: positive statements: can be tested by checking against facts, normative statements: statement cannot be tested (often a personal opinion included) Production possibilities frontier (ppf) is the boundary b/w those combinations of goods and services that can be produced and those that cannot. Choice between 2 things (this or that, not both) o o. Example: sam can catch 6 fish in one day or 12 coconuts in one day. Every fish he catches he gives up 2 coconuts so the opportunity cost o. Slope: -2 (points above line are called unattainable points. Points below of 1 fish is 2 coconuts line are inefficient) Whoever has the lowest oc should be top priority.
