ECO 2013 Chapter Notes - Chapter 1: Allocative Efficiency, Marginal Utility, Marginal Cost
Document Summary
Economics - study of the choices people make to attain their goals, given their scarce resources. Marginal analysis- analysis that involves comparing marginal benefits and marginal costs. Thinking on the margin- looking at perceived additional cost vs perceived additional benefit when you make a choice. The optimal decision is to continue activity up to where the marginal benefit equals the marginal cost (mb = mc). 1. 2) market- is a group of buyers and sellers of a good or service and the institution or arrangement by which they come together to trade. Scarcity- our wants are unlimited, but the resources available to fulfill those wants are limited. Have to make choices as people try to attain their goals. Factors of production, economic resources, or inputs- eg: labor, capital, natural resources (land, entrepreneurial ability). They are used to produce goods and services. Trade-offs: producing more of one good or service means producing less of another good or service.
