ECN 203 Study Guide - Final Guide: Mu*, Economic Equilibrium, Excess Supply
Document Summary
Individual choice (ch. 2: microeconomics- decision making for individuals ii, what if the fundamental concept of economics? scarcity. Define opportunity cost- cost of pursuing a choice. What role do assumptions play in economic models? what does ceteris paribus. With just one option and assuming no scarcity. Continue on until reach bliss/ satiation point. this is where mu = 0. Know how to calculate marginal utility and total utility. Cannot reach bliss/satiation point. do each until utilities are equal across all options: Value of the marginal products (v) are equal across all options : v 1 = v 2 . With several options for using productive resources (such as labor) X= 0 if doesn"t face scarcity of resources. How future consequences and risks affect our decisions. Risk and uncertainty- things that may affect a decision. Markets for goods (chs 3, 4, and 5: why do markets form? specialization- focus on one good.
