Decision making by individuals and firms - Making how much decisions: the role of Marginal Analysis - a principle with many uses
3 important questions on Decision making by individuals and firms - Making how much decisions: the role of Marginal Analysis - a principle with many uses
From which three types of "how much" decsions/ decision makers are profit-maximizing principles of marginal analyisis equally applicable to, in order to affect real GDP.
- Production decisions
- consumption decisions
- policy decisions
What do producers use marginal analysis to make what kind of decisions?
To make optimal production decisions at the margin
Consumption decisions differ from production decision how? what limits consumption and doesn't limit production? why doesn't it limit production?
Consumption decisions are different becasue consumer have limited income while production doesnt
income limits consumption decisions to the degree that cosnumer have to chose more of one good and less of another.
in contrast producers are not limited to income because they can always borrow to find their projects or are not affected by income limitations.
income limits consumption decisions to the degree that cosnumer have to chose more of one good and less of another.
in contrast producers are not limited to income because they can always borrow to find their projects or are not affected by income limitations.
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