[ECO 105] - Final Exam Guide - Everything you need to know! (30 pages long)
30 Mar 2017
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Normative economic principles says how people should behave. Therefore, building a space base on the moon will cost too much. Positive economic principle predicts how people will behave. E. g. the average price of gasoline in may 2010 was higher than in may 2009. Building a space base on the moon will cost more than the shuttle program. People think of the cost and benefits of doing something over another. Unlimited wants and limited resources means having more of one thing means having less of another. Take in action if and only if the extra benefits (marginal benefits) of the action are at least as great as the extra costs (marginal costs) Stop when the marginal benefit equals marginal costs. The value of what must be foregone (given up) Trying to come up with simple representation of things that are actually very complex. -if costs increase the action is less likely. -if benefits increase the action is more likely.
