Econ 201 Dr. Colleen Scott, Week 1
Econ 201 Dr. Colleen Scott, Week 1 ECN 201 (Professor Colleen Scott)
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This 2 page Class Notes was uploaded by Thanh Notetaker on Saturday January 23, 2016. The Class Notes belongs to ECN 201 (Professor Colleen Scott) at La Salle University taught by Colleen Scott in Spring 2016. Since its upload, it has received 29 views. For similar materials see Introductory Microeconomics in Economcs at La Salle University.
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Date Created: 01/23/16
ECON 201. Week one (January 21 and 28 note)th Economic question arises because human creates a scarcity. A scarcity happens because human needs in unlimited while resources are limited. Economics is the social science that studies the choices that individuals, businesses, governments, and entire societies make as they cope with scarcity and the incentives that influence and reconcile those choices In society perspective there are 4 factors of production (also knows as Input or Resources) Land – Labor – Physical Capital – and Human Capital Labor is the working class with skills and experienced ready to be used for production Human capital is the Education and work Experience that will be built up with time. In individual perspective there are 2 factor of production: Time – Budget Income. 3 questions of Microeconomic 1) What to produce – Answer: Consumers decide by their choice of buy 2) How to produce it – Answer: Firms decide the least costly method to stay in the business 3) For whom – Answer: Bases on Prices and Income In class homework and solutions could be found on Canvas account. Production Possibilities and Opportunity Cost To illustrate the Production Possibilities Frontier (PPF) we use the simplify economic model in which 1) We only consider the connection between two goods and services 2) Full employment (resources are use efficiently) 3) Resources are fixed ( besides the quantity of the two services or good, every order factors stay the same) 4) Technology is fixed. Opportunity Cost is the loss of which we may gain from investing in an alternate sources. (The money we could have made by going to work instead of going to school is an opportunity cost) The marginal benefit of a good or service is the benefit received from consuming one more unit of it. Marginal cost includes any additional costs required to produce the next unit. Comparative Advantage & Absolute Advantage: A person has a comparative advantage in an activity if that person can perform the activity at a lower opportunity cost than anyone else. A person has an absolute advantage if that person is more productive than others. For example, Fred can produce either 8 tons of wheat or 12 tons of corn and Veronica can produce either 6 tons of wheat or 15 tons of corn. The tradeoff for Fred would be 1w = 1.5c while the tradeoff for Veronica would be 1w =2.5c So Fred loses less corn to produce wheat. He should be producing wheat while Veronica should specialize in producing corn.
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