CAS EC 101 Lecture Notes - Lecture 2: Marginal Utility, Marginal Cost, Opportunity Cost

• School: Boston University
• Department: Economics
• Course: CAS EC 101
• Professor: Michael Manove

Document Summary

1. think about the goods(not the money: everything has a cost. The marginal unit is a unit you might add to units that you already have. Ex. if i already have one copy of my chem. Marginal benefit -the benefit provided by the marginal unit. Marginal cost- the opportunity cost of the marginal unit. When deciding how many units to buy, sell or use, marginal benefits and marginal costs should be compared. The 4th slice is the marginal unit. The 4th slice would cost me (the marginal cost) After 3 slices, i won"t be hungry. My pleasure from the 4th slice (the marginal benefit) isn"t worth . Therefore, i wouldn"t buy the 4th slice. *called thinking at the margin: people respond to incentives-sometimes in unexpected ways. A law prohibits eviction of the elderly for nonpayment of rent. This law would make it more difficult to collect rent from the elderly.