BU204_03_Johnson_Jennifer_Unit_1_Homework prof correction

BU204_03_Johnson_Jen - Jennifer Johnson Kaplan University BU204 03 Macroeconomics Anthony Brogna Unit 1 Key Terms Definitions Trade Offs a

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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: To me trade off is when choices are made to accept having less of one thing in order to get more of something else. – an example would help: a trade off is when I would really like to take my family out for dinner, but I really need to pay the electric bill. So I choose to pay the electric. 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. - Good! 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). To me “Marginal Analysis” means that if the additional benefit exceeds the additional cost, then I should do it. The key to marginal analysis it that it deals with adding, or taking away, “the NEXT item” and what will be the costs and benefits of adding, or taking away that NEXT item.
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This note was uploaded on 01/28/2011 for the course BU 204 taught by Professor Enricodigiammarinojr during the Spring '10 term at Kaplan University.

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BU204_03_Johnson_Jen - Jennifer Johnson Kaplan University BU204 03 Macroeconomics Anthony Brogna Unit 1 Key Terms Definitions Trade Offs a

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