28 - What are “wise” choices They are choices with...

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Microeconomics Phil Groves EC223 t-r 330-430 and by appt [email protected] BOOK!! 4 th edition Sexton http://spot.colorado.edu/~gravesp syllabus!! GRADING: Create 3 “scores” 2 midterms and final adjust midterms to make mean = 75 RECITATION: You can get a – 0 + and will be factored into your final grade Ex: if you have a B+, a – will send you to a B, a 0 remains the same, a + sends you to an A ECONOMICS: the study of “wise” (rational) decisions when wise decisions are desirable (always) We MUST make decisions – because of “SCARCITY” (can’t do everything) 1. Unlimited wants with limited resources 2. TANSTAAFL (provided one thing with resources, precludes providing something else) 3. Positive prices for goods (NOTE: scarcity is not equal to poverty) Scarcity = always with us Poverty = can be eliminated by growth
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Unformatted text preview: What are “wise” choices? They are choices with benefits > costs as seen by the DECISION MAKER! (de gustibus non est disputandum – tastes are beyond dispute) CHOICES: some are discrete (0-1 – you do it or don’t) in these cases you do it if B>C Most choices are continuous (do I buy another piece of pizza or not…), in that you can do a little more or less of something. Typically, “marginal” benefits fall as more of any activity is done; “marginal” costs tend to rise As MB decrease, MC increase Find place when MB = MC ECONOMIC REASONING will involve incentives (not taste changes) To change behavior – altered opp (income or prices) are what economists assume alters behavior In 1950s average woman had 3.3 children; in 2007 this is 1.9 (replacement = 2.1)… why?...
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