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ECN 104 Lecture Notes - Lecture 1: Opportunity Cost, Ath, Money Supply

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copperweasel398
15 Oct 2016
School
Ryerson University
Department
Economics
Course
ECN 104
Professor
John Isbister

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Document Summary

Economic is about choices that individuals make: but, (cid:862)we (cid:373)ust (cid:373)ake de(cid:272)isio(cid:374) i(cid:374) a(cid:374) e(cid:374)(cid:448)i(cid:396)o(cid:374)(cid:373)e(cid:374)t that is shaped (cid:271)(cid:455) the de(cid:272)isio(cid:374) of othe(cid:396)s(cid:863) Individual choice decisions by an individual about what to do and what not to do. Resource, capital, and human capital

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Related Questions

Scarcity, opportunity cost, and marginal analysis Neha is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: Each hour she spends swimming is an hour that she can't spend biking or run. Which basic principle of individual choice does this sentence best illustrate?

1)Neha has an incentive to spend more time swimming than on biking or running.

2)People usually exploit opportunities to make themselves better off.

3)All choices have opportunity costs.

4)Neha can use time most efficiently by spending the same amounts of time on swimming, biking, and running.

A. Juanita is training for a triathlon, a timed race that combines swimming, biking, and running. Consider the following sentence: Juanita has only 20 hours this week that she can devote to training. Each hour she spends swimming is an hour that she can't spend biking or run. Which basic principle of individual choice do these statements best illustrate?

  1. Juanita can use time most efficiently by spending the same amounts of time on swimming, biking, and running.
  2. People face trade-offs
  3. People usually exploit opportunities to make themselves better off.
  4. Juanita has an incentive to spend more time on swimming than on biking or running.

B. The interaction of individual choices

Immediately after an ice storm brought down power lines throughout the region, hardware stores were sold out of batteries and flashlights. However, within a couple of days, special deliveries brought in extra batteries and flashlights, and everyone who wanted to buy a flashlight or batteries was able to do so. Which of the following principles of economic interaction best describes this scenario?

  1. Markets allocate goods effectively.
  2. When markets do not achieve efficiency, government intervention can improve overall welfare.
  3. All costs are opportunity costs.
  4. There are gains from trade.

1. Three fundamental economic questions

A manager asks an employee, "Should we use our research budget to improve the quality of the products we already make, or to develop new products?"

The manager's question is best classified as which one of the following fundamental economic questions?

a)For whom to produce

b)What to produce

c)How to produce

2. Scarcity, opportunity cost, and marginal analysis

Crystal is training for a triathlon, a timed race that combines swimming, biking, and running.

Consider the following sentence: Because her pool sessions are helping her swim more quickly, Crystal plans to reduce by 1 hour per week the time she spends training on the bike and increase by 1 hour the time she spends in the swimming pool; however, her husband says that she should stop doing any biking and running and spend all 20 hours per week in the pool.

Which basic principle of individual choice does Crystal's plan illustrate that her husband's advice does not?

a)People usually exploit opportunities to make themselves better off.

b)Many decisions are made on the margin.

c)Resources are scarce.

d)All costs are opportunity costs.

Juanita is a hard-working college freshman. One Tuesday, she decides to work nonstop until she has answered 250 practice problems for her physics course. She starts work at 8:00 AM and uses a table to keep track of her progress throughout the day. She notices that as she gets tired, it takes her longer to solve each problem.

Time Total Problems Answered
8:00 AM 0
9:00 AM 100
10:00 AM 175
11:00 AM 225
Noon 250

Use the table to answer the following questions.

1) The marginal, or additional, gain from Juanita’s second hour of work, from 9:00 AM to 10:00 AM, is---------problems.

2) The marginal gain from Juanita’s fourth hour of work, from 11:00 AM to noon, is------------problems.

Later, the teaching assistant in Juanita’s physics course gives her some advice. “Based on past experience,” the teaching assistant says, “working on 62.5 problems raises a student’s exam score by about the same amount as reading the textbook for 1 hour.” For simplicity, assume students always cover the same number of pages during each hour they spend reading.

Given this information, in order to use her 4 hours of study time to get the best exam score possible, how many hours should she have spent working on problems and how many should she have spent reading?

a) 0 hours working on problems, 4 hours reading

b) 1 hour working on problems, 3 hours reading

c) 2 hours working on problems, 2 hours reading

d) 4 hours working on problems, 0 hours reading