The tendency in the economy is for the quantity demanded and quantity supplied to move toward an equilibrium price at which the quantity producers are willing to produce is identical with the quantity consumers are willing to buy. Economic decision makers attempt to make choices that maximize output and satisfaction. Marginal analysis is used to determine the value of producing or consuming an additional unit of the same good or service. The law of diminishing marginal utility teaches that additional quantities of goods yield successively smaller increments of satisfaction. Marginal productivity shows additional output received by adding an additional unit of resources as input.
Every decision has costs and benefits.
By examining the costs associated with each decision in relation to the expected benefits, we attempt to make choices that maximize benefits for the least cost. When examining the consequences of a decision it is important to consider the long-term, as well as the immediate, effect. Since economics is the study of decision making about the use of productive resources, the central benefit of education for economic literacy should be development of the ability to conduct objective, reasoned analysis of economic issues. Informed decision making requires acquisition and use of knowledge of economic concepts and generalizations. This knowledge allows citizens to understand the economic dimensions of issues.