Thinking on the margin

Economy  One who manages a household  Much like a household, society must determine how to manage scarce resources to satisfy our unlimited wants  Such as who will work, what will we produce and at what price

Economics is decision making  Scarcity... means that society has limited resources and therefore cannot produce all the goods and services people wish to have  Economics is decision making  Term to always remember---tradeoffs (offsetting one goal for another)  Your time  Your money  Fun and grades

Decision Making II  Decision making also involves opportunity cost (the cost of something you give up in order to get something)  Going to college  Buying new clothes  Doing calculus homework in class

Economics  Human beings want stuff  But the total of all material wants is more than our production capability---complete satisfaction is impossible  This reality is economics  Making efficient use of limited resources to satisfy our human wants

Thinking at the margin  These decisions are made by marginal analysis  Comparing the marginal benefits to the marginal costs  A small change in either one can make a tremendous change in our decision making