Economics 1022A/B Study Guide - Final Guide: Average Variable Cost, Product Differentiation, Bounded Rationality

• School: Western University
• Department: Economics
• Course: Economics 1022A/B
• Professor: Bruce Hammond

Document Summary

The what question is what goods and services do we produce? . The how question is how do we use the factors of production to produce these goods/services? . The for whom question is who consumes the goods and services that are produced? : you make choices that are in your self-interest choices that you think are best for you, factors of production: If the marginal benefit of option 1 is greater than its marginal cost then you will choose option 1. If the marginal cost of option 2 is greater than its marginal benefit than you will not choose. Option 2: positive statements are about what is. A positive statement might be right or wrong but can be tested by checking it against facts: normative statements are about what ought to be. Chapter 2: the economic problem: the production possibilities frontier (ppf) shows the limits to production.