ECN 104 Study Guide - Comprehensive Midterm Guide: Human Resources, Physical Capital, Market Failure
Document Summary
Lecture 1: chapter 1 introduction to microeconomics. Example: given to buy dvds and books. What are the options if the price of a dvd is and the price of a book is . Budget line: shows the possible combinations of dvds and books which can be bought with . Given the prices of the products (dvd and book) 120=0+120 on the graph the points make a line every point in the triangle of the graph is an option that can be chosen, (since you don"t have to use all of the (all those options are attainable) Therefore being 10/20 there is also a ratio of dvds to books which is 1:2: if the dvd price was 40 then therefore the price of a book is 20. Fast food lines: move or not move to another line, there is always a cost-benefit decision: marginal analysis. If marginal cost > marginal benefit = don"t do it.
