Econ 1102 Week 2 notes
Econ 1102 Week 2 notes ECON 1102
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This page Class Notes was uploaded by Anisha Gonsalvez on Sunday January 24, 2016. The Class Notes belongs to ECON 1102 at Temple University taught by Bognanno in Fall 2016. Since its upload, it has received 83 views. For similar materials see Microeconomic Principles in Economcs at Temple University.
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Date Created: 01/24/16
Jan 19 Incentives people respond to incentives Pay rises when they meet their quota and their sales raise Productivity rises when their pay is based on how many sales they make rather than being paid by the hour Sometimes employees trade their sales If someone is 2 sales from meeting the quota and someone has already met their quota they offer them the last two sales and they both get bonuses and the person who offered gets money that they would ve made by making those 2 sales that they gave away Sometimes you make extra money by selling more not after meeting a quota and getting base pay If you are paid hourly you might go slowly and pay more attention If paid by sale then they go too fast so it can be bad too Trade Markets Governments People have a motivation to do a good job then when you put the incentives they work even harder but when you removed the money they don t work as hard in beginning They had a motivation but then you made it about money and took away the money so all their motivation is gone Production Possibility Frontier PPF A way to illustrate tradeoffs in production It assumes full efficiency That you are using all your resources and using it the best possible way The line is PPF It doesn t have to have a slope of 1 It doesn t necessarily have to be equal If PPF is straight then resources are perfectly transferable The equation of PPF y 1x 400 graph The equation is the opportunity cost of 1 unit of x Ex on an island there are 4 heart surgeons and 2 tv repairmen Heart surgeons can do 2 surgeries per day and tv repairman can repair 1 tv per day All the heart surgeons and tv repairmen do equal then 44 lf 1 tv repairman is assigned to a heart surgery Only heart surgeons get a successful surgery So 4 heart surgeons who do a perfect job and only 3 people xing tvs And similarly opposite or as it goes on Resources are only somewhat transferable Corn and wheat Resources are specialized Opp cost of wheat and you produce more com On a curve at a point you look at the tangent line and look at the slope
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