ECON 202 Lecture Notes - Lecture 1: Marginal Utility, Marginal Cost, Marginalism

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Econ 202: principles of microeconomics - lecture 1: foundations and models. People are required to make choices in order to attain their goals; choices are necessary because everything attainable is scarce. Scarcity: a situation in which unlimited wants exceed unlimited resources available to fulfill those needs. Economics: a study of those choices made by people to attain their goals given their scarce resources. Economists study these choices using economic models: simplified versions of reality used to analyze real-world economic situations. Rational means using all available information to achieve goals. A person will go through with an action only if the benefits outweigh the costs. Example: a company will choose the selling price that will be the most profitable. The one that will benefit them the most. As incentives change, so do the actions that people will take. Example: health insurance in the us often encourages obesity by offering to pay for most or all of the patients" medical costs.

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