FMSC 290 Lecture Notes - Lecture 4: Marginal Cost
1 May 2018
School
Department
Course
Professor
Lecture February 8th, 2018
• Thinking like an Economist
• Economic models
o Diagrams and equations
o Omit many details
o Allow us to see what’s truly important
o Built with assumptions
o Simplify reality to improve our understanding of it
o If it is a good model, we can generalize it to the big population
o Economy
▪ Production distribution consumption
• Circular low diagrams (model)
o Visual model of the economy
o Shows how dollars flow through markets among households and firms
o Decision makers
▪ Firms and households
o Markets
▪ For goods and services
▪ For factors of production (inputs)
• Production possibilities frontier
o A graph
o Combinations of output that the economy can possibly produce
o Given the available
▪ Factors of production
▪ Production technology
• Incremental cost
o The first hour of studying, grade goes from 20-30
o Second hour of studying, grade goes from 30-35 and so forth
• Efficient levels
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