Lecture 1
Lecture 2
Lecture 2
Lecture 2
Lecture 2

100

Why would someone turn down a free ticket?
The opportunity cost of time, it's not worth it

100

What are some reasons a country might operate below its production possibility frontier?
recession, lousy economic system, market failures and/or unemployment

100

What is economic growth?
An increase in the capacity to produce

100

Define UTILITY
The happiness or benefit that is received

100

When Marginal Benefit is GREATER THAN Marginal Cost, it is a signal to do more or less? What about LESS THAN?
More, Less

200

What are the opportunity costs of going to school?
Forgone wages and time

200

Whose production possibility curve is higher, Russia or the U.S.? Why?
The U.S. Because they have a more efficient economic system (better technology)

200

What causes economic growth?
An increase in QUANTITY and QUALITY of factors of production

200

When making consumer choices, we weigh the MU per what for all possible goods?
MU per dollar

200

Why are net benefits maximized when MB = MC?
Any move (fall or rise) from this reduces your NET BENEFITS, which makes you worse off

300

What does interest on funds have to do with opportunity costs?
Forgone income on funds used

300

How are the choices between corn and steel made in the U.S.?
In the market by supply and demand (profits and losses)

300

As we near capacity, what economic law kicks in?
Law of Diminishing Returns

300

What do marginal costs do as we consume more?
Marginal costs go up

300

What does moving from farms to cities do to the MB of having children?
It lowers your MB, which in turn raises your MC

400

What is the general goal of all actions, to max what?
To max your net benefits

400

How are the choices between corn and steel made in Russia, Cuba and China?
By the government (Totalitarian approach)

400

What impact does technological change have?
Capacity and productivity increase, it fights off scarcity and diminishing returns

400

We compare what to what in order to make decisions?
Marginal Costs to the Marginal Benefits

400

Why do seat belts and air bags cause people to drive faster?
MC of driving faster goes down because your risk goes down

500

Define efficiency, equity and security
high living standards, equal distribution and stability

500

How are the choices between corn and steel made in Germany?
Mainly by the market but more gov. involvement than the U.S.

500

As we consume more of a good, what happens to TOTAL UTILITY? MARGINAL UTILITY?
TOTAL goes up, MARGINAL goes down

500

Define NET BENEFITS
NET BENEFITS = MARGINAL BENEFITS - MARGINAL COSTS

500

What determines almost all prices and wages in our economy?
Supply and Demand