Thinking at the Margin:

• When Economists look at decisions, they point out one more

characteristic in addition to opportunity cost.
• Many decisions involve adding one more unit or subtracting
one more unit, such as one minute or one peso.
• To understand what it means to think at the margin, picture a
piece of paper with a line drawn down from both sides.
• That lines separate the space used for writing from extra
space on the paper.
• You could use some of that extra space or you could leave it
blank.
• You are thinking about using one additional unit.
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 Thinking at the Margin:
• In the example of getting up early to study or
sleep, you used an “all or nothing” approach.
• You actually had more options available to you
that I did not give you the opportunity to choose
from.
• A. You could have decided to get up one, two, or
three hours earlier to study or sleep instead.
• B. You could have made a decision by looking
specifically at how many extra hours to study that
morning. When you make a decision about how
each extra hour would help your grade means you
are thinking at the margin.
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 Finally….

“Thinking at the margin” means

making a
decision about how much more or
less to do. It allows people to
evaluate options based on available
resources.
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 Choices
Resulting
from
Scarcity

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 Who will make the choice?
3 Types of Economy

1. Tradition
- Economic choices
are decided by past
experiences
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Command
 Who will make the choice?
2. Command
- Economic choices are made through a
sort of economic commander-in-chief or a
group of men
whose wishes are
the commands of the
producers.
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Market
 3. Market

Economic
choices are
made by
consumers’
demand which
is influenced
by the price
system
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better ?
 Is one better than the other?
In the Philippines:
Agriculture – Traditional
Practice of Profession –
Command
Basic commodities –
Market

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Nes/pes
Testing 1,2 ,3…Identify either Traditional,
Command, or Market
1) Consumers decide what products to buy and how much
2) Sellers compete against each other in terms of price and
quality
3) Government authorities influence both producers and
consumers about what goods and services are to be
available in the market.
4) Decisions revolve around time-tested technologies and
economic practices
5) Both producers remain conventional and as much as
possible avoid risks brought about by new technologies
and anything that has to do with modernization.
•

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 Normative and Positive Statements of
Economics

A normative statement is that which makes a resolution about

what should, or ought to be.
-results of the cultural, ideological, religious and
philosophical systems of society
-value judgment

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Nex X
 Example of a Normative Statement
• The Department of Agriculture must be be data-driven
agriculture at its best, helping maximize productivity and
profitability at the farm level, accurately keep track of the
sector’s performance and mitigate harm from climate
change-related disasters.
•

- PDI July 10, 2019

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PES
 Ex: Normative Statement
The rich should be taxed more because
the goods of this earth must be equally
shared by men who are all born equal.
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pes
 •Positive statements – are those
that can be proved or
disproved by quantifiable data.
It concerns what are, what
were, and what will be.
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Pes X
 Positive statement
Ex: The rich have to be
taxed more because this will
increase our national savings
for investment, and
consequently, will lead to
faster economic growth.
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What to produce?
 POSITIVE

• “With a burgeoning population and long experience in

Econ?
intensive rice cultivation, it is difficult to understand why
the Phil. has plunged from rice sufficiency to
dependence.
-PDI JULY 9, 2019

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What to produce