Econ in Real Life
You skipped class to binge-watch a K-drama. What economic principle explains this decision?
Opportunity cost
If prices go up and people buy less, this is the law of...?
Law of Demand
You were willing to pay ₩30,000 for a ticket but only paid ₩20,000. What is your surplus?
₩10,000 consumer surplus
What kind of good is national defense?
Public good
Your neighbor blasts music at 2 AM. What kind of externality is this?
Negative externality
You choose the ₩5,000 lunch instead of ₩10,000 sushi. What did you just do?
Faced a trade-off
A new iPhone comes out. What happens to the demand for the older model?
It decreases
What does producer surplus measure?
Extra money a seller makes above their minimum price / willingness to sell
What happens in the tragedy of the commons?
People overuse a common/shared resource
You get a flu shot and don’t spread the virus. What kind of externality is this?
Positive externality
A company raises prices slowly over time so customers don’t react. What concept is this?
Thinking at the margin
Gas is expensive but people still buy it. Is this elastic or inelastic demand?
Inelastic
What is total surplus?
Consumer + Producer surplus
Is Coupang Eats delivery a public good? Why or why not?
No - it’s excludable and rival
What is the purpose of a Pigouvian tax?
To reduce negative externalities (like pollution)
A student only studies if there's a quiz tomorrow. What’s motivating them?
Incentives
Why do sellers increase prices during limited-edition product drops?
High demand created by a shortage → higher price
What is the goal of an efficient market?
Maximize total surplus
Why might a clean public park get dirty over time?
No one takes care of it - free rider problem
It's a positive externality, so what is the danger of too much free educational content online?
It can harm formal businesses or be low-quality/illegal
You buy shoes during a flash sale even though you didn’t need them. What’s this called in economics?
Consumer surplus
You calculate a PED of -3.5. What does that tell you?
Demand is elastic
You sell BlackPink merch for ₩50 but were willing to sell it for ₩30. What’s your producer surplus?
₩20,000
What two things define a public good?
Non-excludable and non-rival
According to the Coase Theorem, what must happen for private solutions to work?
People must be able to bargain without high costs