Econ 1102, Week 1 Notes
Econ 1102, Week 1 Notes ECON 1102
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This 2 page Class Notes was uploaded by Anisha Gonsalvez on Thursday January 7, 2016. The Class Notes belongs to ECON 1102 at Temple University taught by Bognanno in Fall 2016. Since its upload, it has received 218 views. For similar materials see Microeconomic Principles in Economcs at Temple University.
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Date Created: 01/07/16
Jan 14 - 7 principles of economics 1) Everyone faces tradeoffs. You have to give up one thing to get another. Some people don’t realize that when the government spends money on something it takes from the taxes or borrows it (it takes money off tax payers in the future). So there is always a tradeoff. When they make new currency then inflation increases. The currency value lowers. Nothing is free, everything entails a tradeoff. 2) there is an opportunity cost which is what you give up to get another thing What is the opportunity cost of going to college full-time? - forgone earnings - direct costs: tuition, books, fees - leisure?, sleep? Alternative earnings streams: A – going to college B – going to college from 18-22. Earnings stream B, as the age increases is higher than earnings stream A. If it is proven that earnings after college is higher than not going to college, the wage gap helps people decide whether or not going to college. It also lowers unemployment if your value increases, so your pay goes up. 3) rational people think at the margin. How much to buy not whether or not to buy. what is the marginal benefit of something or what is the marginal cost of doing something? For example: if your favorite food was pizza and the price rose up by 25% you would generally eat it less. MC = marginal cost = change in total cost / change in quantity = price If the price of a slice is $2.50 then the marginal cost is MC. MB = marginal benefit = benefit of an extra unit (slice) Since the marginal cost is 3 and it is more than 2.50, it is beneficial to you. As the marginal benefit goes down and since it is under your marginal cost, you are more likely not to buy it. 2
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