ECO- Scarcity and Marginal Analysis
ECO- Scarcity and Marginal Analysis Eco2023
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This 2 page Class Notes was uploaded by Cara Johnson on Friday September 11, 2015. The Class Notes belongs to Eco2023 at Florida State University taught by Dr. McCaleb in Fall 2015. Since its upload, it has received 174 views. For similar materials see Microeconomics in Economcs at Florida State University.
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If Cara isn't already a tutor, they should be. Haven't had any of this stuff explained to me as clearly as this was. I appreciate the help!
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Date Created: 09/11/15
EC02023 Principles of Microeconomics Dr McCaleb Scarcity and Marginal Analysis Marginal analysis The pri do not re ect the social value they re ect the value at the margin Which is What matters Choices are made at the margin meaning on the edge Marginal analysis 0 leads to correct decisions 0 conserves on the scarce resource of information 0 is descriptive of the most realworld decision processes more realistic If the marginal bene t MB is greater than gt the marginal cost MC then performing more of that good or service would prove to be bene cial to you If the marginal bene t MB is less than lt the marginal cost MC then producing less of that good or service would be more ef cient If the marginal bene t MB is equal to the marginal cost MC then you are maximizing your net gain You should increase every activity as long as MB gt MC and decrease every activity as long as MB lt MC resulting in MB MC optimal activity De nitions My The amount of a resource that is available is less than the desired amount of that resource Choice If a resource is scarce choices must be made alternatives Opportunity Cost When choosing a scarce resource the opportunity cost is equal to the value of the next best alternative forgone Marginal Analysis Comparing marginal bene ts and marginal costs in order to determine which activity to do more of and which to do less of lncen ves Changes in marginal bene ts ad marginal costs to in uence decisions in predictable ways people always respond to incentives