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BENEFIT-COST ANALYSIS: An analytical technique that compares the benefit generated by an activity with its opportunity cost of production. The rule is that if benefits exceed costs, then the activity is efficient and should be undertaken. In some cases the end result of benefit-cost analysis is net benefits, which is benefits minus cost. A positive value means the activity is efficient. In other cases the end result of benefit-cost analysis is a benefit-cost ratio, which is benefits divided by costs. A ratio greater than 1.0 is thus the indication of an efficient activity.
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Lesson Contents
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Unit 1: Buying Basics |
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Unit 2: Law of Demand |
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Unit 3: Demand Curve |
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Unit 4: Determinants |
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Unit 5: Scarcity |
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Unit 6:
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Demand
This lesson on demand offers a little insight into the purchases of a wide range of goods. In fact, this demand topic is does more than offer insight into buying behavior. It's also one half of the market analysis -- the other half being supply. And market analysis is one of the most widely used tools in the study of economics. Economists explain a lot of economic phenomenon using markets. But to use markets, we need demand. And that brings us back to this lesson. - In the first unit of this lesson we examine the basic concept of demand. While you've likely come across the term demand before, we'll see the specific way the term is used in economics.
- The second unit then takes a look at the law of demand, which is one of the most important and most fundamental economic principles that we'll encounter.
- As we more on to the third unit, our attention turns to the demand curve, which is the graphical embodiment of the demand concept.
- In the fourth unit, we examine how the five basic demand determinants cause the demand curve to shift from one location to another.
- And finally in the fifth unit, we make a connection between demand and the fundamental problem of scarcity.
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ASSUMPTIONS, PRODUCTION POSSIBILITIES The four key assumptions underlying production possibilities analysis are: (1) resources are used to produce one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production techniques do not change, and (4) resources are used in a technically efficient way.
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YELLOW CHIPPEROON
[What's This?]
Today, you are likely to spend a great deal of time looking for the new strip mall out on the highway wanting to buy either a case of blank recordable DVDs or a pair of red goulashes with shiny buckles. Be on the lookout for jovial bank tellers.
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This isn't me! What am I?
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Two and a half gallons of oil are needed to produce one automobile tire.
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"As the births of living creatures at first are ill-shapen, so are all innovations, which are the births of time. " -- Sir Francis Bacon, philosopher
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CHIPS
Clearing House Interbank Payments Systems (US)
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