Popular in Principles of Economics: Macroeconomics
Popular in Economcs
This 2 page Class Notes was uploaded by Sidney Hong on Saturday September 19, 2015. The Class Notes belongs to ECO 106 at Pace University taught by Cesar Castope in Fall 2015. Since its upload, it has received 36 views. For similar materials see Principles of Economics: Macroeconomics in Economcs at Pace University.
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Date Created: 09/19/15
Fall 2015 Principles of Economics Micro ECOlO6 CRN 72490 MondayWednesday 900 AM 1025 AM Professor Cesar Castope 0914 N0 Classes Rosh Hashanah Assignments due 0921 0 Review chapter 2 09 16 Class Canceled Assignments due 0921 0 Review chapter 2 Chapter 2 Key Principles of Economics Learning Objectives 1 Apply the principle of opportunity cost 2 Apply the marginal principle 3 Apply the principle of voluntary exchange 4 Apply the principle of diminishing returns 5 Apply the realnominal principle Five key principles of economics are as followed Principle of Opportunity Cost 0 The opportunity cost of something is what you sacri ce to get it The Marginal Principle 0 Increase the level of an activity as long as its marginal bene t exceeds its marginal cost 0 Choose the level at which the marginal bene t equals the marginal cost Principle of Voluntary Exchange 0 A voluntary exchange between two people makes both people better off Principle of Diminishing Returns 0 Suppose that output is produced With two or more inputs and we increase one input While holding the other inputs xed 0 Beyond some point called the point of diminishing marginal returns output Will increase at a decreasing rate The Real Nominal Principle 0 What matters to people is the real value of money or income its purchasing power not the face value of money or income Opportunity Cost 0 The opportunity cost of something is What you sacri ce to get it 0 An opportunity cost can involve both time and money 0 Economists use the production possibilities curve to represent these costs
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