ECON 2030 Study Guide - Midterm Guide: Hoboken Catalogue, Opportunity Cost, Rationality
Document Summary
Part 1: bibi had already purchased hob tickets. Part 2: bibi has not yet purchased hob tickets. Opportunity cost: perceived pleasure from free show plus ticket price. If bibi chooses the hob, you can predict that had she already bought the ticket she would decide to go to the hob. You can predict this by deducing behavior by observing choices people make: how much/many choices, stasia and the smorgasbord. Buffet: 1st bite costs ; 2nd bite costs nothing. Benefit: perceived pleasure >/= cost: zero (rational: relevant costs, sunk costs, the answer: when the alternative is better, delta and the mayor. Amongst those who are losing: tool: production possibilities frontier (ppf) Describes boundary of ability to produce things at a certain time. See graphs: efficiency: getting the most out of finite resources; in order to produce more of 1 good it has to give up some of another; opportunity cost is > zero.
