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BU204_03_Johnson_Jennifer_Unit 1 Homework

BU204_03_Johnson_Jennifer_Unit 1 Homework - Jennifer...

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Jennifer Johnson Kaplan University BU204- 03 Macroeconomics Anthony Brogna Unit 1 October 17, 2010
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Key Terms – Definitions Trade Offs: “a comparison of costs and benefits” (Krugman & Wells, 2009, p. 8). To me trade off is when choices are made to accept having less of one thing in order to get more of something else. Opportunity Cost “what you must give up in order to get an item you wants” (Krugman & Wells, 2009, p. 7). For me “opportunity cost” is part of everyday life. For example, if decide at the spur- of-the-moment to go to the movies of going in to work it is not just six dollars for the ticket plus the gasoline and wear and tear on the car to get there. The opportunity cost is lost wages, the chance of being seen at the movies when I should be at work. Marginal Analysis: “comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. The study of such decisions is known as marginal analysis.” (Krugman & Wells, 2009, p. 9).
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