ECON 1116 Study Guide - Midterm Guide: Marginal Utility, Cost, Street Light
24 Aug 2016
School
Department
Course
Professor
Document Summary
Trade off: giving up something in order to gain something, in every decision that you make. Opportunity cost: item/benefit that you give up in order to accommodate for the decision that you make, making money is the opportunity cost of studying. Thinking at the margin: small incremental adjustments to an existing plan, adjustments will occur as long as they remain profitable. Incentives: something that induces a person to act, price is what everyone thinks of first when purchasing a product. Product getting more expensive buyers buy less sellers make more: government increases taxes on cigarettes. Trade: exchange of goods and services, enjoy what you produce and what others produce through trade, benefits everyone involved, everyone has to be happy about the trade. Government intervention: market economy leave it to the people to decide what to buy and sell. Firm decides who to hire and what to make. Households decides where to work and what to buy.
