ECP3302 week one terms
what is an example of normative economics?
we should restrict the use of fracking technology because of the risk of contaminating groundwater
positive economics
what is
normative economics
what should be
scarcity
when human wants for goods and services exceed the available supply
marginal cost
cost of the last hour of advertising
cost benefit principle
An economic unit will decide to take an action if the marginal benefit is at least as great as the marginal cost
what is an example of positive economics?
The development of fracking technology has resulted in an increase in the supply of oil
Marginal utility per dollar
Units of satisfaction per dollar spent
why do markets tend to be effiecient?
because they are based on voluntary exchange
ecological factors
energy supply, natural capital, and the absorptive capacity of the environment influence
opportunity cost
explicit + implict cost (value of waht you give up and value of next best choice)
marginal utility
extra satisfaction received from consuming one more unit of a good
where is marginal revenue in a competitive market?
in a competitive market marginal revenue =price
sustainabilty
leave future generations no worse off
explicit cost
money changes hands
implicit cost
no payment is made
what is a model?
relationship between variables
total benefit
revenue generated by all customers for all advertising hours
marginal benefit
revenue generated by the additional customers gained from the last hour of advertising
total utility
satisfaction received from consuming a bundle of goods
economics
the study of how economic units make decisions under scarcity and the incentives and objectives that influence those decision
total cost
total amount spent for all hours of advertising
net benefit
total benefit - total cost
rational
using all available information when making decisions
efficiency
using resources in the most productive way possible to produce the goods/ services people want