1 Wednesday, August 23, 2006

1 Wednesday, August 23, 2006 - Examples 1. The choice...

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Wednesday, August 23, 2006 Microeconomics Why Economics? Dealt with everyday ECONOMICS is the study of how society manages scarce resources. OR “The science of choices” 2 Facts of our Word 1. Unlimited Wants Scarcity-underlines all economics 2. Limited Recourses SCARCITY implies we have to make choices. TRADEOFFS are faced by people in economics. Classic Tradeoffs 1. “guns and butter” = more money toward national defense the less for consumer goods 2. The trade off between a clean environment and a high level of income (more laws placed on the firms causes production prices to go up in tune less income for workers) The decision is made based on the benefits and costs OPPORTUNITY COSTS is what you give up to get something else. Results from choosing one thing over another. Based on what you decide, the cost is the next best opportunity.
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Unformatted text preview: Examples 1. The choice between studying economics for an hour or studying for history exam or working at part-time job. (Choice to study for economics, the cost is points upped on history exam or money earned in par time job.) 2. The decision that Justin Upton had to make between college and pro ball. (Choice to go pro, the cost is college education.) Wednesday, August 23, 2006 3. No free lunch hotel offers free lunch to sit through talk, to get you to buy something. (Choice to take free lunch, cost is time and money it took to get there.) 4. Going to bed at 9:30 on Friday has higher opportunity cost than going to bed at 9:30 on Tuesday. (Cost on Friday night you might miss seeing someone get drunk)...
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1 Wednesday, August 23, 2006 - Examples 1. The choice...

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