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ECON 2030 Exam 1 Notes (got 94% in the course)

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ECON 2030
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TODAYS MENUMonday 10 June 2013 IBUSINESS APractice Problemsanswers on Moodle1Chapter 1612 1618 21 IISUBSTANCE ASyllabus1Overview2Note on text Chapter and page numberingCh 4 is most important chapter of the semester BThe basics1Economies and economicsaDefinitionsEconomics The study of how societies provision themselves w the material means of existenceTime is scarce bWhat How For whom ConsequencesiMicroeconomics Covered thru 2nd examIndividual ppl businesses industries inventory decisionsHow will we produce that tea those services etcPaid labor Prison labor Machines Indentured servantsWhom gets the goods and svcs that are producedFaculty football tickets by chance Consequences for entire society macro whole nations economyAvailability of jobsiiMacroeconomicsCovered on final Answers to Ex s1Micro2MacrocMarketsA social process in which goods and services are exchanged for money no matter the form that money may take an activity not a place or thingBenefitsWhat I getMonetary or pleasure excitement sense of worthCostsWhat I give up CEconomic reasoning1Opportunity Cost and ScarcityOpportunity CostThe best alternative that we are giving upEx3Benefit isof fishCost only involves what you give upAnswer is 4 fishbc he can only be in one place or the other2The MarginSmall increments of changeLike deciding bw 1518 hours in the fall is a marginal decision3RationalityTo be rational the benefit must be at least as great as the cost DExamples of Economic Reasoning1A question2Eitheror ChoicesaCharles and the Concert Ticket parts 1 and 2oSee Todd for 30 or Beth for freeBenefit to see ToddExpected pleasureCost 30 ticket Expected pleasure of seeing BethSo will I see ToddOnly if the benefit is at least as great as the costWhat if the benefit is exactly equal to the costIndifferenceEither choice is rationaloSee Beth instead of ToddSwap costs and benefits oNow what if youve already purchased the ticket to see Todd when you find out Beth is playingBenefits and costs stay the same except the 30 ticket is no longer relevantIt is a sunk cost iRelevant costsiiSunk costs
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