ECON 201 Lecture Notes - Lecture 2: Marginal Cost, Opportunity Cost, Marginal Product
Document Summary
Economic model: an abstract description of a part of an economy, simplifying assumptions are made, with a goal of understanding, & explaining the effects of economic events. The scientific method: observing real-world behavior & outcomes, formulating explanations based on those observations. Economic principles: a statement about economic behavior or the economy that enables prediction of the probable effects of certain actions. Other things equal (ote) assumption: holding things constant. This photo by unknown author is licensed under cc. Production possibilities frontier (curve): a combination of goods that we have. Diminishing marginal returns: increasing one input, while holding all inputs constant: marginal = additional. A: peeling 15 carrots in 10 mins & 10 carrots in the next 10 minutes, writing 10 pages in 1 hour & 5 pages in the next hour. Q: jane makes 10 birdhouses in an hour; after working a second hour, she has a total of 15 birdhouses.
