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ECO 1104 Study Guide - Midterm Guide: Tim Hortons, Marginal Utility, Microeconomics

Course Code
ECO 1104
Lawrence Harris
Study Guide

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ECO1104-Jan. 18, 2016
Explicit cost-out of pocket costs ex. the money you spend on something
Implicit cost- the best salary you gave up
-the best note of return you give up
Making decisions
-Marginal Costs (opp. costs)
-Marginal Benefits (Marginal->"additonal")-ex. buying new computers everytime,
even if you spent thousands in the past (i.e. past expenditure), if value is added
with the newer device, than it has/creates a MB.
-choose to do something "buy", when MB > MC (MB must be quantifiable)
DO NOT consider "past expenditurer" SUNK COSTS
expenditure-an amount of money that is spent on something. : an
amount of time, energy, effort, etc., that is used to do
something. : the act of spending money.
Principle 5-trade can make everyone better off (e.g. buying coffee from tim
hortons instead of making it from scratch-people produce something you
want/need better than you can, so you trade to gain the marginal benefit)
The best chance of surviving is to produce things as effciently as possible, hence the
above statement.
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