ECON 110 Study Guide - Kraft Dinner, Opportunity Cost, Exogeny

• School: Queen's University
• Department: Economics
• Course: ECON 110
• Professor: Ian James Cromb

Document Summary

Opportunity cost is the value of the next best alternative foregone. In this case, the value of the best alternative (which is only one on the night) is my total benefit minus my total cost from the alternative. Attending bieber"s concert is worth to me up to 50$ whereas actually attending his concert will cost me . Thus i am giving up the and so the opportunity cost of seeing the hip is . An increase in household income increases their ability and willingness to buy more goods and services. This means that demand from households increase, causing firms to experience a rise in sales and in turn an increase in revenue due to the greater number of goods and services sold. This explanation is supported by the concept of the circular flow of income and expenditure showing how economic agents are linked.