The marginal benefit curve has a negative slope because of a general principle that the more we have of any good or service‚ the smaller is its marginal benefit and the less we are willing to pay for an additional unit of it. It decreases because many of us like variety. The more we consume one good or service‚ the more we tire of it and prefer switching to something else. 9) Compare and contrast
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deficits in the domestic economy and trade deficits in the international economy. 4. Which of the following is not a central focus of the "economic perspective"? A. Scarcity and choice. B. The scientific method. C. Purposeful behavior. D. Marginal analysis. 5. The term scarcity in economics refers to the fact that: A. economic wants are limited and resources are abused. B. even in the richest country some people go hungry. C. no country can produce enough products to satisfy everybody’s
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Introduction This work was made in order to explain the principles of economics that is handled in society or a country. People‚ companies‚ the government and society must face a common problem: managing scarce resources. Scarcity means that society has limited resources and therefore can not produce all the goods and services that people want to have (unlimited wants). To address the shortage must choose between different alternatives available (go to the stadium or a party‚ buy a coat
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Book: Principles of Economics (N. Gregory Mankiw) http://admin.wadsworth.com/resource_uploads/static_resources/0324168624/8413/Mankiw_TenPrinciple_Videos.html Introduction economy: Greek: the one who manages the household scarcity: the limited nature of society`s resources economics: the study of how society manages it´s scarce resources economy: a group of people interacting with one another as they go about their lives important: management of society´s resources; resources are scare
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tremendous increase in purchasing power of rural consumers will be courtesy bumper crops. The rural propensity to spend on durables and fast-moving consumer goods is expected to rise accordingly. Total credit flow to the agriculture sector through institutional channels is expected to increase. The setting up of agricultural export zones should help farmers and thus increased marginal propensity to consume. First‚ let’s get the obvious facts that everyone knows out of the way. Rural India is a major part
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the other • Example: Welfare increases equity‚ but decreases efficiency (higher unemployment) o Cost of a decision/goal is what was given up to achieve it • Known as opportunity cost • Good decisions are made by taking opportunity cost into account o Rational people think at the margin • Rational people know that decisions are not black and white • By comparing the marginal benefit of a decision to the marginal cost‚ individuals make marginal changes to an already existing plan of action • Example:
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bulging downward or linear (straight)‚ depending on a number of factors. A PPF can be used to represent a number of economic concepts‚ such as scarcity of resources (i.e.‚ the fundamental economic problem all societies face)‚ opportunity cost (or marginal rate of transformation)‚ productive efficiency‚ allocative efficiency‚ and economies of scale. In addition‚ an outward shift of the PPF results from growth of the availability of inputs such as physical capital or labour‚ or technological progress
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of microeconomics. The way we consume items‚ products or eatables in our daily live is all related to utility. For instance when we consume junk food it gives utility to us‚ when we listen to music on our iPods it provides utility to us or even when we read from a book we are getting utility out of that book. Utility basically satisfies our wants. In the examples above our want for hunger‚ entertainment and knowledge are all being satisfied. b) Diminishing Marginal utility is another core theory
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increase in investment. Based on our understanding of the model presented in Chapter 3‚ we know with certainty that an increase in investment will cause: A) an increase in output. B) an increase in the multiplier. C) a reduction in the marginal propensity to save. 1 D) a reduction in the multiplier. E) both A and D 6) Which of the following is definitely true for any given point on the LM curve A) there is no inventory investment B) production is equal to demand C) the goods market
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economy‚ the aggregate consumption function takes the form C = aW + bY. The theory has the implication that high income leads to a low average propensity to consume over short periods of time. However‚ over a long period of time‚ wealth and income increase together which leads to a constant ratio W⁄Y and thus a constant average propensity to consume. However‚ the theory is criticized for not considering that the elderly have precautionary savings and bequests which will discourage dissaving
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