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Macro Economic Theory
A popular concept that is used both in macro economic theory, as well as in micro economic theory is that of marginal change. Marginal analysis is therefore one of the most important principles of economic theory, and one must study a few concepts of economic theory before one can proceed. Marginal change can be explained as a small addition or subtraction, in proportional comparison, to the total quantity of some variable. On the other hand, marginal analysis can be described as the analysis or the study of the relationships that are brought about by marginal changes, in related economic variables. As far as micro economic theory is concerned, marginal concepts are utilized primarily in order to explicate several different forms of optimizing behavior. For example, while customers are stated to be maximizing their utility or their satisfaction, companies are stated to be maximizing their profits.
 
In essence, it is often stated in economic theory that where there are only a limited number or quantity of resources available, one cannot obviously have everything that one would want, and this means that certain tough choices must be made. This can mean that every time one is forced to make a choice, something else must be given up. Economic theory on the basis of marginal theory and marginal analysis offers one a framework upon which to base one’s decision: for example, the best decision can be made by effectively weighing the marginal benefits against the marginal costs involved in making an economic decision. It must be remembered that economic theory is also often based upon the philosophy of ‘utilitarianism’, which reiterates on the principle of “the greatest good for the greatest number”. This can be explained by stating that one must be able to make a decision based on the objective of maximizing societal welfare through the decision. It must be noted that although this type of choice may be easy at times, it may be extremely difficult at other times.
 
Take for example a customer who is in the process of deciding what sort of new car he must purchase. This person would make his decision based on what he likes best, provided it stays within his fixed budget. This can mean that this customer would have maximized utility by managing to purchase the things that he likes the best. This example is a simple utilization of the utilitarian principle. At times, it may not be so easy; for example, when one is in the process of deciding an issue on healthcare. Must the elderly be denied vital health care just so that the young can avail of better health care? Similarly, must the urban children have better educational facilities, at the cost of depriving rural children of basic education? This means that the principle of the ‘greatest good for the greatest number’ would be directly related to how one describes and quantifies ‘good’, and in order to understand these ideas better, it is imperative to understand first the concepts of marginal costs and marginal benefits. Marginal costs, that is, the additional costs that are imposed when one more unit of a product is manufactured or produced can be explained by using this example: if the cost of making nine pieces of pizza is $90, and the cost of making 10 pieces is $110, then this would mean that the ‘marginal cost’ of producing the tenth piece of pizza is $20. This means that total costs will always increase wh本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。