MGEA02H3 Chapter All covered except topic 5: Fall Term Texbook Microeconomics Notes

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lilacbear974

23 Jan 2017

School

UTSC

Department

Economics for Management Studies

Course

MGEA02H3

Professor

Jack Parkinson

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MGEA02H3 Full Course Notes

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Principle #1: choices are necessary because resources are scarce. Some choices are best not left to i(cid:374)di(cid:448)idual"s ex. Government purchase undeveloped la(cid:374)d so i(cid:374)di(cid:448)iduals do(cid:374)"t sell it to de(cid:448)elope(cid:396)s. Principle #2: the true cost of something is opportunity cost. P(cid:396)i(cid:374)(cid:272)iple #3: (cid:862)ho(cid:449) (cid:373)u(cid:272)h(cid:863) is a de(cid:272)isio(cid:374) at the (cid:373)a(cid:396)gi(cid:374) (cid:862)eithe(cid:396) o(cid:396) (cid:272)hoi(cid:272)e(cid:863) Example how much time spent studying for chemistry or economics. Trade off- a comparison of costs and benefits. Principle #4: people usually respond to incentives, exploiting opportunities to make themselves better off. Principle #6: markets tend to move towards equilibrium. Because people respond to incentives, markets move toward equilibrium. Principle #7: resources should be used efficiently to achieve society goals. An economy is efficient if it can only make someone better off by making another person worse-off. Since people tend to exploit gains from trade, market usually leads to efficiency. P(cid:396)i(cid:374)(cid:272)iple #9: whe(cid:374) ma(cid:396)kets do(cid:374)"t a(cid:272)hie(cid:448)e effi(cid:272)ie(cid:374)(cid:272)(cid:455), go(cid:448)e(cid:396)(cid:374)(cid:373)e(cid:374)t i(cid:374)te(cid:396)(cid:448)e(cid:374)tio(cid:374) (cid:272)a(cid:374) i(cid:373)p(cid:396)o(cid:448)e societ(cid:455)"s (cid:449)elfa(cid:396)e.

Related Questions

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?

Juanita can use time most efficiently by spending the same amounts of time on swimming, biking, and running.
People face trade-offs
People usually exploit opportunities to make themselves better off.
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?

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

rosetermite517

1. You and other college students are deciding whether to major in music or engineering. You learn that there is a shortage of engineers making it easy for engineering graduates to find employment while there is a glut of musicians for whom finding a job is difficult. As a result, you and many other college students decide to major in engineering. What economic principle does this illustrate?

a. Specialization leads to economic efficiency

b. Government intervention can improve efficiency when there is a market failure

c. Individuals do not normally take into account the decisions of other individuals

d. Markets tend to move towards equilibrium as individuals respond to incentives

e. Changes in incentives are unlikely to change the decisions people make

2. Which of the following describes the equity-efficiency trade-off?

a. Actions intended to make economic outcomes fairer can cause efficiency to decrease

b. Government intervention can increase efficiency in a market

c. There is always a more equitable outcome that is also more efficient

d. The least efficient economic outcome is the fairest outcome

3. John works eight hours per day. Today he has to decide whether to work overtime and stay one more hour in the office, or go back home and spend that hour studying for his economics exam. His company pays him $70 per day if he works 8 hours, and $100 per day if he works nine hours. Assuming that, if John studies one more hour, his exam score increases from 75 to 80, what is John's rational decision?

a. John decides to work overtime only if he values getting a 5 point increase on his exam score less than $30

b. John decides to work overtime only if he values getting an 80 on his exam more than $100

c. John decides to work overtime only if he values getting an 80 on his exam less than $100

d. John decides to work overtime only if he values getting a 5 point increase on his exam score more than $30

carminecrab519

MGEA02H3 Chapter All covered except topic 5: Fall Term Texbook Microeconomics Notes

MGEA02H3 Full Course Notes

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