Optimisation — reasoning at the margin

Economists have at their disposal a set of techniques that can be applied to particular decision problems. Whilst these techniques are powerful, they may also be restrictive in the sense of only being applicable in clearly defined specific circumstances. Much more fundamental are a range of concepts which can be called decisiontools. The purpose of this chapter is to introduce these general concepts which provide the basic foundation on which economic decision-making is built. In a sense this chapter, together with Chapter 1, are the most important in the book since an understanding of these concepts taken with the basic framework of decision-making should enable decision-making to be transformed to a scientific level.