Principles of Microeconomics Notes Part 1 - 4.0ed this course!

7 Pages
116 Views
Unlock Document

Department
Economics
Course
ECO 2023
Professor
All Professors
Semester
Winter

Description
ECO 2023 Module 1  04/07/2014 Principle 1: People face trade offs The purpose of an economic system is to allocate scarce resources. Efficiency­ the property of society getting the maximum benefits from its scarce resources, resources are  used in ways that provide the most value If production is efficient then it is NOT possible to produce a given quantity of  output at a lower cost Equity­  the property of distributing economic prosperity fairly among members of society (everyone gets  whatever society thinks is “fair”) Efficiency does NOT guarantee equity Principle 2: The Cost of Something is What you give up to get It Opportunity cost – whatever must be given up in order to obtain some item We make choices b/c: resources are scarce & choices involve a tradeoff Principle 3: Rational People Think at the Margin Rational­ systematically and purposefully doing the best you can to achieve your objectives Ex: Consumers want to purchase the bundle of goods and services that allows them the greatest level of  satisfaction given their incomes and the prices they face.  Firms want to produce the level of output that maximizes the profits they earn.  Marginal changes­ small incremental adjustments to a plan of action (marginal=additional, incremental) Marginal cost­ the additional cost to you over and above the costs you have already incurred Marginal benefit­ the additional benefit above and beyond what you’ve already incurred Marginal analysis­ systematic comparison of the marginal (extra) benefits (MB) and the marginal (extra)  cost (MC) of any choice Choose action if MB>MC Don’t choose if MB
More Less

Related notes for ECO 2023

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit