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ECON 2020 Lecture 1 Week 1

by: Brianna Notetaker

ECON 2020 Lecture 1 Week 1 Econ 2020

Marketplace > Auburn University > Econ 2020 > ECON 2020 Lecture 1 Week 1
Brianna Notetaker
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These are the lecture notes for Microeconomics Lecture 1. 8-19-16 They cover the basic start to microeconomics and list several definitions and key concepts.
Principles of Economics: Microeconomics
William M. Finck
Class Notes
Economics, Microeconomic, Microeconomics




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This 3 page Class Notes was uploaded by Brianna Notetaker on Friday August 26, 2016. The Class Notes belongs to Econ 2020 at Auburn University taught by William M. Finck in Fall 2016. Since its upload, it has received 102 views.


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Date Created: 08/26/16
ECON 2020Lecture 1 Friday 8-19-16 COLORS: Orange: DEFINITION Green: FORMULA Yellow: DIFFERENTIATE THE CHANGESIN SOME DEFINITIONS Introduction to Economics Economicsis a studyof choicesthat we make. Microeconomicsmainlyfocuses onindividuals.  Economics– thestudyofthebehaviorexhibitedbyindividuals, organizations,andsocietyas a wholein makingidealdecisionsunder scarcity conditions.  Scarcity – A situationinwhicha resource usedto make a good or service is limited(supply)comparedtoour desirefor them (demand).  Scarce good – an economicgood thatcannotbe obtainedinan unlimitedamountatzero cost.  Free good– aneconomicgoodthatcan be obtainedinanyquantity desiredat zero cost. Price VS. Cost  Price – indicationfortheproducerslettingthem knowwhatand how much ofa productneedsto be produced;In a standardmarket transaction,thisishowmuch theconsumer can expectto payfor product.  Cost– Whatthe individualisgivingup bychoosingto obtainthe desiredproduct;In a standardmarkettransaction,thisiswhatthe producermust payin orderto providetheproduct. Types ofCosts 1. Explicitcosts– regulatedpaymentstakendirectlyout-of-pocket 2. Implicit/Opportunitycosts– The mostvaluableoptionavailable 3. Economiccost = explicitcosts+ implicitcosts EconomicCost of AttendingAuburn University The cost oftwo semesters atAuburntotalsupto$10,696. The estimated cost each studentshouldspendonbooksina year is $1,200. The equationisbasedoffoftheassumptionthatthestudentwillcomplete theirdegree in4 years.  Cost ofTuition = (explicit) $10,696 x 4= $42,784  Cost ofBooks = (explicit) $1,200 x 4 = $4,800 $42,784 + $4,800 = $47,584 The followingisan estimatedyearlyaverage ofa full-timejob wage for a studentoverthe 4-year periodofattendingcollege.  Full-time job = (implicit) $26,104 x4 = $104,416  Economiccost = $47,584 + $104,416 = $152,000 Resources– the amountofelementsused inthe manufacturingofgoods andservices Different Types of Resources: 1. Natural– materialsthataresuppliedbythe earththatcannotbe manufacturedsuchas water, oil,land,minerals,etc. 2. Labor – an exertionofmentalandphysicalefforts usedin the productionprocess. 2 3. Capital–goods thatare manufacturedandusedintheproductionof othergoods andservices. 4. Entrepreneurship–thecapabilityofmerging differentresources togetherto create a valuableproduct. A way thatwe make choicesis byattemptingtoincrease our utilityby meansof marginaldecisionmaking.  Utility– the joyanindividualwillexperienceas a consumerwhen the desiredgoodor service is obtained.  Marginal– somethingthatwill be addedto the existingunitthat creates a change;additional “Every timewe analyze a choice, we are tryingto seeif social welfare is maximized.Utilitymaximizationby producers and consumers usually maximizessocial welfare.” –Dr. Macy Finck 3


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