ECON 4400 Chapter Notes - Chapter 2: Indifference Curve, Marginal Utility, Opportunity Cost
4 Dec 2016
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In 2002 merrill lynch had to pay 100 million to settle charges that its analysists reommended stocks to clients that they privately thought were poor investments. Economic analysis is based on the notion that individuals assign priooritis to their wants and choose the most preferred options. For modeling purposes people care only about their wealth to simplify: economic models based on this assumption behave quite well. Individuals are not endowed with perfect knowledge nor is additional info costless to aquire. Marginal costs and benefits are incremental costs and benefits that are associated wih making a decision. It is the cornerstone of modern economic analysis. Costs and benefits that have already been incurred are sunk (non-recoverable) and are irrelevant to economic decision. Using limited resources for one purpose precludes their use for something else. Combinations above the line are infeasible given an income of i.
