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FMSC 290 Study Guide - Spring 2018, Comprehensive Midterm Notes - Opportunity Cost, Graph Of A Function, Demand Curve


Department
Family Science
Course Code
FMSC 290
Professor
Manouchehr (Mitch) Mokhtari
Study Guide
Midterm

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FMSC 290
MIDTERM EXAM
STUDY GUIDE
Fall 2018

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Lecture- January 30, 2018
Assumption
o Example: something that everyone accepts
o More of a good thing is better than less of it
What about ice-cream???
Axioms- speculate about the relationships between variables
o A=apple
o B=banana
o C=cranberry
o A>B
o B>C
o Therefore, assumption= A>C
Hypothesis, theory, conceptual framework, model
Collected data and tested the hypothesis A>C
o If you reject it, you go and collect more information
Unlimited wants vs. limited resources = economics
Economics does not discuss need
Ten principles of economics
How people make decisions:
o Principle 1: people face trade-offs
No such thing as a free lunch
To get something that we like, we usually have to give up something else
that we also like
Making decisions
Trade off one goal against another
Economics believe there is no such thing as “I had no choice”- there is
always an alternative/ fork in the road
Trade-offs
Students: time
Parents: income
Society:
o National defense vs. consumer goods (guns vs. butter)
o Clean environment vs. high level of income
o Efficiency vs. equality
Efficiency
Society getting the maximum benefits from its scarce resources
Size of the economic pie
Equality
Distributing economic prosperity uniformly among the members of
society
How the pie is divided into individual slices
o Principle 2: the cost of something is what you give up to get it
People face trade offs
Make decisions
o Compare cost with benefits of alternative
Opportunity cost
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Whatever must be given up to obtain an item
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