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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