Class Notes (1,100,000)
CA (650,000)
UTSG (50,000)
ECO (2,000)
ECO101H1 (700)
Lecture 11

Lecture 11-Review

Course Code
Jack Carr

This preview shows page 1. to view the full 4 pages of the document.
Thursday, October 22nd, 2009.
Opportunity Costs
You choose to attend university for one year. Tuition and books cost $5000. Room and
board cost $7500. What is the opportunity cost of attending university if next best
alternative is:
1) To work and earn $25000 while living at home, where room and board is free
2) To work and earn $25000 while sharing an apartment and paying $7500 for room
and board $ 5,000
3) to travel for a year, which is free because your uncle will pay
Satisfaction from Travel
4) to travel for a year, which will cost $20,000
Satisfaction - 20,000
Satisfaction - $7,500
The following are the elasticities for Volkswagen Beetles:
Price elasticity of demand = 2
Income elasticity of demand = 1.5
The supply of Beetles is elastic.
True or False?
a. A 10% increase in the price of a Beetle will reduce the quantity demanded by
20% (T)
b. An increase in consumer income will increase the price and quantity of Beetles.
Since price elasticity of demand is greater than 1, total revenue will go down. (F)
You're Reading a Preview

Unlock to view full version