ECO-2013 Lecture Notes - Lecture 1: Ceteris Paribus, Marginal Utility, Marginal Cost
Document Summary
Economics: explain and predict the behavior of consumers, irms, and government. There are always tradeofs: opportunity cost value of the next best alternaive (not everything you give up) Individuals choose purposefully: referred to as economizing behavior try to get the most value/beneits for the least cost or efort (aka raional behavior) Incenives mater: the incenive doesn"t have to be money. Think on the margin (addiional or incremental), not in total or on average: coninue to engage in an acivity as long as the expected marginal beneit is greater than the expected marginal cost. More informaion leads to beter decision-making, but more informaion is costly: refer to i-iv. Many choices create a secondary efect: the primary efect is oten immediate and visible, the secondary efect usually comes later and is not as visible. Value is subjecive: value is determined by the purchaser. Economic thinking is scieniic thinking: economists use data and informaion generated by people to explain and predict acions.
