ECON 2020 Lecture 1 Week 1
ECON 2020 Lecture 1 Week 1 Econ 2020
Popular in Principles of Economics: Microeconomics
verified elite notetaker
Popular in Department
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.
Reviews for ECON 2020 Lecture 1 Week 1
Report this Material
What is Karma?
Karma is the currency of StudySoup.
You can buy or earn more Karma at anytime and redeem it for class notes, study guides, flashcards, and more!
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
Are you sure you want to buy this material for
You're already Subscribed!
Looks like you've already subscribed to StudySoup, you won't need to purchase another subscription to get this material. To access this material simply click 'View Full Document'