Class Notes (837,826)
Canada (510,504)
Economics (1,590)
ECO101H1 (575)
Jack Carr (83)

The Economics Way of Thinking

5 Pages
Unlock Document

Jack Carr

Topic 1 - The Economic Way of Thinking th th (Week One Sep 13 J Sep 17 ) th Sep 13 J Scarcity & Opportunity Cost Scarcity: Individual: limited budget; limited time Society: limited resources to produce goods Economics: the study of how rational people make choices; the study of how society managers its scarce resources; Scarcityleads to Choices leads to Economics (the study of making choices). 1. Opportunity Cost: what one forgoes by not taking the best next alternative; whatever must be given up to obtain some item; Insights: :@ZZ]}L^^Z}o}O_ZZ}oreplaced by ^^Z}o}O}zZz]ZZK}ZZ]2ZoooL]}O_ :L oZ^@]K }Z_ZooZK}L }Z e.g.1. What is the OC of attending University for one year ($8,000) if the next best alternative is working full-time at $20,000yr? Opportunity Cost = TuitionsBooks + Forgone Earnings = $8000+$20,000 The Opportunity Cost of spending $1 is $1 (you could use the same dollar to buy other goods or services); e.g.2 What is the OC of attending a 2-hr movie (ticket $12) if: a). the next best alternative is working a PT job at $10hr OC=Ticket Price + Forgone Earnings = $12 + $20 = $32; b). the next best alternative is going for a walk OC=Ticket Price + the Satisfaction from the walk (no monetary value) (but the satisfaction from the walk apparently exceeds $20.00, by implication); e.g.3 someone operates a hotdog stand with: a. Revenue from an 8-hr day: 100 hotdogs x $2.5hotdog = $250; b. Cost of an 8-hr day: Rent-$75; Profit = $100 buns, hotdogs = $25; Total Cost = $100; NOW should one continues operating the hotdog stand if: a). The next best alternative is working at $15hr? No, $15 X 8 = $120 greater than $100; b). The next best alternative is working at $10hr? Yes, $10 X 8 = $80 less than $100. c).Why do few medical doctors operate hot dog stands? Since medical doctors are the highest-earning professions in Canada, the opportunity cost of their time is too high for them operate hotdog stands. ECO100Y1-Pesando-Notes edited by Eva Wu
More Less

Related notes for ECO101H1

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.