ECON1013 Lecture Notes - Lecture 1: Marginal Cost, Marginal Utility, Economic Efficiency

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26 Jun 2016
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The social science concerned with the efficient use of limited or scarce resources to achieve maximum satisfaction of human materials wants. Human wants are unlimited, but the means to satisfy the wants are limited. Resources can only be used for one purpose at a time. The cost of any good, service, or activity is the value of what must be given up to obtain it. (opportunity cost). Rational self-interest entails making decisions to achieve maximum fulfillment of goals. Different preferences and circumstances lead to different choices. 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 weighs the marginal benefit against the marginal cost. Whether the decision is personal or one made by business or government, the principle is the same. The marginal cost of an action should not exceed its marginal benefits.

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