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[ECO100Y5] - Final Exam Guide - Ultimate 44 pages long Study Guide!

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whitebeaver655
28 Nov 2016
School
UTM
Department
Economics
Course
ECO100Y5
Professor
Michael H O

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ECO100Y5 Full Course Notes
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ECO100Y5 Full Course Notes
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Document Summary

The decision by an individual of what to do and what not to do. Overall choice is the sum of the individual chocies. Basic principles of individual choice: resources are scarce, the real cost of something is what you must give up to get it. How much? is a decision at the margin: people usually take advantage of opportunities that make the better off. 1. there are gains from trade: markets more toward equilibrium. 3. resources should be used as ef ciently as possible to achieve society"s goals: markets usually lead to ef ciency, when markets don"t achieve ef ciency, gov. intervention can help. The quantity available isn"t large enough to satisfy all productive uses. Natural resource and human resource (ex. lumber, intelligence, time) P#2. the true cost of an item is its opportunity cost. You must give up something in order to get something else. Related to individual choice (must make decisions)

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Related Questions

A. Juanita is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: Juanita has only 20 hours this week that she can devote to training. Each hour she spends swimming is an hour that she can't spend biking or run. Which basic principle of individual choice do these statements best illustrate?

  1. Juanita can use time most efficiently by spending the same amounts of time on swimming, biking, and running.
  2. People face trade-offs
  3. People usually exploit opportunities to make themselves better off.
  4. Juanita has an incentive to spend more time on swimming than on biking or running.

B. The interaction of individual choices

Immediately after an ice storm brought down power lines throughout the region, hardware stores were sold out of batteries and flashlights. However, within a couple of days, special deliveries brought in extra batteries and flashlights, and everyone who wanted to buy a flashlight or batteries was able to do so. Which of the following principles of economic interaction best describes this scenario?

  1. Markets allocate goods effectively.
  2. When markets do not achieve efficiency, government intervention can improve overall welfare.
  3. All costs are opportunity costs.
  4. There are gains from trade.