ECON 101 Lecture Notes - Lecture 1: Economic Surplus, Opportunity Cost

• School: U of M
• Department: Economics
• Course: ECON 101
• Professor: Ronald C Caldwell

Document Summary

Opportunity cost = forgone benefit of the next-best option: examples. Concert ticket costs , but it also costs whatever else you could have bought with . Going to class = opportunity cost of taking time to come to class. Sacrifice time and cost of travel for gaining knowledge. Cost of opportunity to buy something else. Costs: labor, rent, supplies, permits, utilities, time spent running the business. Positive = true/false with enough info; objective: the moon is made of cheese. Normative = subjective; value judgements; key words: should, good, fair: the university should give all students a"s, difference of value judgments. Consume an additional unit if the mv > p. Plot of quantity consumed as a function of p (graph of marginal values) Law of demand = as p increases, q decreases (and vv) Cs = tv te = (sum of mvs) (p * q)