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ECON2030EXAM1 Notes (97% in the course

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ECON 2030

1TODAYS MENUMonday 24 January 2011IBUSINESSAPractice Problemsanswers on Moodle1Chapter 1612 1618 212Chapter 21 2 48 103Chapter 41 37 1020 224Chapter 515 9 11 145Chapter 714 7 8 1117 20 24 25IISUBSTANCEAThe basics1Economies and economicsaDefinitionsbWhat How For whom ConsequencesiMicroeconomicsiiMacroeconomicscMarkets social process in which goods and services are exchanged for moneyBEconomic reasoning1Opportunity Cost in deriving benefit you have given up an opportunity elsewhere your next best option2The Margin small increments in which decisions are made3Rationality assumption that people act rationally when faced with a choice the individual chooses option that will be bestCExamples of Economic Reasoning1A question Why would you stop something profitable2Eitheror ChoicesaBibi and the Concert Ticket parts 1 and 2HoB concert ticket vs free concert at barPart 1 Bibi had ALREADY purchased HoB ticketsWill Bibi go to the House of BluesBenefits perceived pleasure from HoB showOpportunity cost perceived pleasure from free showBibi will go to the HoB if she perceives the benefit isorthe opportunity cost Indifferent 2 options are the same then picking the best option is eitheriRelevant costsiiSunk costs cannot be recovered HoB ticket cost of parking time driving NOT RELEVANTPart 2 Bibi has not yet purchased HoB ticketsWill Bibi go to the House of BluesBenefits perceived pleasure of HoB show
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