ECO206Y1 Lecture Notes - Market Power, Marginal Cost, Cold-Formed Steel

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Published on 19 Oct 2012
School
Department
Course
Microeconomics
Gordon Cleveland
Office – MW 364 [Monday, Wednesday 1-2]
Phone – (416) 287-7317
E-mail – cleveland@utsc.utoronto.ca
Lectures will be posted for download on the Intranet every Sunday. Print them and add
extra notes in class
TA – Zoe Zhang
Office hours: Tuesday 4PM – 6PM, Thursday 10AM – 11AM, 4PM5PM
Email violet0114@hotmail.com
Room – MW 396
Tests
Multiple choices (mostly 10 per question)
Problem based (not memorization)
Theory based
First test = 25%, Second test = 25%, Final exam = 50%
Course Based on:
Knowledge of basic economic theory
Ability to do problems using theory and math (graphic, calculus, algebraic)
Note
Lecture notes for each week by Sunday night
Download handbook for tutorial questions and weekly problem sets
TA offices (MW 369)
Microeconomics is the study of individual market in the economy (demand and
supply, determining price and quantity)
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Lecture #1
Economics – the study of the use of scarce resources to satisfy unlimited human wants.
Resources (or inputs/factors of production) – land(air), capital (equipment, factories,
etc.), labour.
Alternative uses – choices to be made because resources are scarce
Basic economic decisions
What? Services/goods
How? Best method of production
For whom?
How does a market economy make a decision?
Buyers and sellers interact in output markets.
Opportunity costs the opportunity costs of taking an action is measured by the value of
the next best alternative action. Value of the alternative foregone. Made of explicit (ex.
Cost), and implicit cost (value of your time/resources).
Ex. Opportunity costs to go to university? (sacrifices)
$6000 tuition
$1000 for books
^ explicit
Could potentially make about $20 000 on a paying job if did not attend university
(implicit)
Thus, the value of going to university must exceed for equal to $20 000.
Read p. 1-22, 23-46
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Lecture #2
What is the opportunity cost of getting married?
Giving up time with friends
Giving up one person for another
Any changes as a result of getting married
Expensive (explicit) cost of meal, dress, cake…etc.
What you could have done if you didn’t get married? Use of time (implicit)
What is the opportunity cost of getting a month long vacation? Does it depend on
when you take it?
Value of your time (implicit) cost of not working
Cost of vacation (explicit)
What you could have done in replace of the vacation
In terms of opportunity cost, people usually go on vacations in the summer
Does opportunity cost really matter? Do we make decisions according to opportunity
cost?
Opportunity cost of older people getting a university degree is higher than younger people.
These are important factors in making decisions: reason why young people are in
university is because it can increase income in the future. Plus, we have more time to
invest. Adults take evening courses because they have to work in the morning, they only
have to sacrifice small things to learn in the evening.
Companies charge interest in loaning money because there are many alternative ways they
can use that money. Opportunity cost comes into play as they make a decision as to how to
use that money. Instead of lending money for free, companies can charge interest which
better benefits them.
When recourses are scarce, choices must be made about how those resources will be used.
The rest cost of using the resources in one way will be that you give up the output you
might have gotten by using them in an alternative way. Economics focuses on how choices
are made, and what the consequences of those choices are, in a market economy,
individuals make choices and then markets bring those individuals together. There are
tradeoffs everywhere. “There are no free lunches.”
Economists think in models. They are reflections of real life situations. They are tools for
thinking about a problem.
Production possibilities frontierwill help us think about issues like choices,
opportunity costs, and economic efficiency. It shows a set of output possibilities possible
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Document Summary

Lectures will be posted for download on the intranet every sunday. Print them and add extra notes in class. Office hours: tuesday 4pm 6pm, thursday 10am 11am, 4pm 5pm. Tests: multiple choices (mostly 10 per question, problem based (not memorization, theory based, first test = 25%, second test = 25%, final exam = 50% Ability to do problems using theory and math (graphic, calculus, algebraic) Economics the study of the use of scarce resources to satisfy unlimited human wants. Resources (or inputs/factors of production) land(air), capital (equipment, factories, etc. Alternative uses choices to be made because resources are scarce. Opportunity costs the opportunity costs of taking an action is measured by the value of the next best alternative action. Cost), and implicit cost (value of your time/resources). ^ explicit: could potentially make about 000 on a paying job if did not attend university (implicit) Thus, the value of going to university must exceed for equal to 000.

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