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Scarcity
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Limit on output due to limit on input- we then have to CHOOSE- what we can not and may have
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opportunity cost
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whatever must be given up to obtain some item-the value of second best*
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Utility
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the satisfaction a product yields
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marginal analysis
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comparisons of marginal benefits and marginal costs- decision making
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marginal benefit
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the extra benefit(satisfaction) of adding one unit
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Marginal cost
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cost of one additional unit
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Generalization
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Average
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other things equal assumption
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all other relevant factors remain unchanged
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Graphical Expression
answer
economic models are expressed graphically
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Economics
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The study of the use of limited resources that have alternative uses
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Microeconomics
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Study of economics but in an individual sense
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Macroeconomics
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The study of the economy as a whole
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aggergate
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Collection of specific economics treated as one unit
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Positive economics
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Cause and effect relationship; facts
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normative economics
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Value judgement about what the economy should be like; "should" and "ought"
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Economic problem
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Wants unlimited but resources are limited- must choose= engage in marginal analysis
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limited income
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finite amount of income
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Unlimited wants
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We always want more than we can buy or have
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budget line/constraint
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Shows the combinations of purchases with a specific income available
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Attainable and Unattainable Combinations
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To achieve maximum utility you will want to spend the full amount
Unattainable- outside income limit
Unattainable- outside income limit
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