11:373:121 Chapter Notes - Chapter 1: Dependent And Independent Variables, Linear Equation, Fallacy
20 Aug 2016
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Chapter 1: limits, alternatives, and choices: chapter outline, economics- the social science that studies how individuals, institutions, and society make the optimal best choices under conditions of scarcity, economic perspective- three key features, 1. ) Recognizes that all choices involve costs and that these costs must be involved in an economic decision: 2. ) Incorporates the view that to achieve a goal, people make decisions that reflect their purposeful self-interest: 3. ) Individuals and society have unlimited economic wants: 2. ) Recognizes that scarcity requires choice and that making a choice has an opportunity cost: opportunity cost- giving up the next best alternative to the choice that was made, purposeful behavior, 2. ) The marginal cost of a larger-size diamond is the added expense beyond the cost of the smaller-size diamond. The marginal benefit is the perceived lifetime pleasure (utility) from the larger-size stone. If the marginal benefit of the larger diamond exceeds its marginal cost, buy the larger stone.
