ECN 204 Chapter 1: ECN 204 Chapter 1 Notes.docx

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13 Mar 2012
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Economics: the social science concerned with how individuals, institutions, and society make optimal (best) choices under conditions of scarcity. Economic perspective: a viewpoint that envisions individuals and institutions making rational decisions by comparing the marginal benefits and marginal costs associated with their actions. Scarcity and choice: opportunity cost: the amount of other products that must be foregone or sacrificed to produce a unit of a product. Purposeful behavior: utility: the pleasure, happiness, or satisfaction obtained from consuming a good or service, purpose behavior simply means that people make decisions with some desired outcome in mind. Ex: parents help pay for their children"s education for the same reason stated above. Marginal analysis: benefits and costs: marginal analysis: the comparison of marginal (extra or additional) benefits and marginal costs, usually for decision making. Ex: should i attend another year of school or not? .

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