ECO100Y5 Chapter Notes - Chapter 1: Opportunity Cost

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16 Apr 2016

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ECO100Y5 Full Course Notes

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Microeconomics is the study of how individuals make decisions and how these decisions interact. Principles of economics: choices are necessary because resources are scarce, the true cost of something is its opportunity cost: What you must give up in order to gain something else: how much is a decision at the margin: Either-or decisions that require a trade off (compare the costs and benefits of doing something) People and firms respond to incentives to make themselves better off until there are no more opportunities to be exploited (at equilibrium: resources should be used efficiently to achieve society"s goals. An economy"s resources are used efficiently when they are used in a way that has fully exploited all opportunities to make everyone better off without making other people worse off.

Related Questions

Which of the Ten Principles of Economics does welfare economics explain more fully?

a. The cost of something is what you give up to get it.

b.Markets are usually a good way to organize economic activity.

c.Trade can make everyone better off.

d.A country’s standard of living depends on its ability to produce goods and services.

mauvespider988

1. Economists are particularly adept at understanding that people respond to

a. laws.

b. incentives

c. punishments more than rewards.

d. rewards more than punishments.

2. Government policies can change the costs and benefits that people face. Those policies have the potential to

a. alter people's behaviour.

b. alter people's decisions at the margin.

c. produce results that policymakers did not intend.

d. All of the above are correct.

3. Penny is a piano teacher and Dan is a tile layer. If Penny teaches Dan's daughter to play the piano in exchange for Dan tiling her kitchen floor,

a. only Penny is made better off by trade.

b. only Dan is made better off by trade.

c. both Penny and Dan are made better off by trade.

d. neither Penny nor Dan are made better off by trade.

4. The basic principles of economics suggest that

a. markets are seldom if ever, a good way to organize economic activity

b. government should become involved in markets when trade between countries is involved.

c. government should become involved in markets when those markets fail to produce efficient or fair outcomes.

d. All of the above are correct.

azurearmadillo867

Part 1

The term opportunity cost suggests that

A.	in any exchange situation where one person gains, someone else must lose
	B. not all individuals make the most of life's opportunities
C.	executives do not always recognize opportunities for profit as quickly as they should
	D.the only factor that is important in decision making is cost
E.	because goods are scarce, in order to get some good you must give up some other good in return

Part 2:

Which of the following is an example of division of labor?

	A.an author writing a book one chapter at a time
B.	a firm trying to get rid of a labor union
C.	separating resources into four categories: land, labor, capital, and entrepreneurial ability
D.	allocating revenue among a firm's resource suppliers
E.	dividing an assembly process into separate steps

Part 3:

In economics, specialization means

	A.producing something using only one type of resource, such as labor
B.	producing something using only one type of labor
C.	focusing efforts on a particular product or a single task
D.	producing only one unit of output
E.	producing something using only one unit of a variable resource

ECO100Y5 Chapter Notes - Chapter 1: Opportunity Cost

ECO100Y5 Full Course Notes

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Principles of Economics

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