Micro Notes
01DEFINE AND EXPLAIN A RANGE OF CORE ECO TERMS AND CONEPTS INCLUDING ECONOMIC SURPLUS OPP COST AND SUNK COST
DEFINE AND EXPLAIN A RANGE OF CORE ECO TERMS AND CONEPTS INCLUDING ECONOMIC SURPLUS OPP COST AND SUNK COST
CHAPTER !: THINKING LIKE AN ECONOMIST
Scarcity principal: due to limited resources to satisfy unlimited wants, trade offs occur in terms of having more of one good and less of another
Economic decision: any decision when securing something of value means going without something else
Economics: study of how people make choices under conditions of scarcity and of the results of those choices for society
Cost benefit principal: resolving trade offs based on the idea an action should be only taken when its benefits exceed the cost
Opportunity Cost: Is the value of the next best alternative to taking a particular action
Economic Surplus is the benefit of taking any action minus its cost * The goat of rational economic devision makers is to maximize their economic surplus * E.g. Should you walk into town to save $10 on a $25 computer game. Benefit of buying in town is saving the 10 but value of everything to get into to town. It costs 9 however to walk into to town. Thus owrth it as you have an economic surplus of $1
Reservation Price is the higheset price on would be willing to pay for any good or service. This may be different form the price of that commodity on the market. * E.g. Water after a marathon race * Eraser in a multiple choice exam
Sunk Cost is a cost that cannot be recovered at the moment a decision is made. * Costs already incurred or ‘sunk’ are not relevant to your decisions * The only costs that should influence a decision about whether or not to take an action are those that we can avoid by not taking that action
Economic Decision Any decision where securing something of value means going without some other thing of value
Economic Naturalist Someone who uses basic economic concepts to
DEFINE AND EXPLAIN A RANGE OF CORE ECO TERMS AND CONEPTS INCLUDING ECONOMIC SURPLUS OPP COST AND SUNK COST
CHAPTER !: THINKING LIKE AN ECONOMIST
Scarcity principal: due to limited resources to satisfy unlimited wants, trade offs occur in terms of having more of one good and less of another
Economic decision: any decision when securing something of value means going without something else
Economics: study of how people make choices under conditions of scarcity and of the results of those choices for society
Cost benefit principal: resolving trade offs based on the idea an action should be only taken when its benefits exceed the cost
Opportunity Cost: Is the value of the next best alternative to taking a particular action
Economic Surplus is the benefit of taking any action minus its cost * The goat of rational economic devision makers is to maximize their economic surplus * E.g. Should you walk into town to save $10 on a $25 computer game. Benefit of buying in town is saving the 10 but value of everything to get into to town. It costs 9 however to walk into to town. Thus owrth it as you have an economic surplus of $1
Reservation Price is the higheset price on would be willing to pay for any good or service. This may be different form the price of that commodity on the market. * E.g. Water after a marathon race * Eraser in a multiple choice exam
Sunk Cost is a cost that cannot be recovered at the moment a decision is made. * Costs already incurred or ‘sunk’ are not relevant to your decisions * The only costs that should influence a decision about whether or not to take an action are those that we can avoid by not taking that action
Economic Decision Any decision where securing something of value means going without some other thing of value
Economic Naturalist Someone who uses basic economic concepts to