B201 PPT lecture week 1

B201 PPT lecture week 1 - outweigh the cost of shopping...

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Economics Some Simple Rules B201 Prof. Smith
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SCARCITY Economics is the study of scarce resources in a system of unlimited wants. WHAT DOES THAT MEAN?
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A resource is Scarce if … 1)The quantity demanded of the good is greater than the quantity supplied IF THE GOOD WAS FREE. 2) There is at least one valued alternative use of the resource
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Which is Scarce? A) Diamonds B) Leather Jackets C) Water D) All of the above
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Why Even though some of these goods can be found at a local mall doesn’t make them NOT SCARCE So, what isn’t scarce?
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Cost - Benefit You should only do something if the extra (marginal) benefit outweighs the extra (marginal) cost. Sometimes called operating at the margin. MARGINS MATTER
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How many hours should you shop online for a new TV? Only as long as the extra savings
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Unformatted text preview: outweigh the cost of shopping on-line. Opportunity costs We seldom think about the cost of not doing something else. For example: What is the opportunity cost of you entering college? Sunk Costs These are costs that are not retrievable. For example: When I was growing up, my father spend every Sunday working on the family car. He said, Hey, I have already put so much time into the car, I owe it to myself and the car to keep it working. True of False: Is my father correct? True: My father is right. False: My father is wrong. Common Usage There is a lot of usage of economic terms Demand Supply Markets Widgets We need to make sure we are using terms correctly in the context of economics....
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B201 PPT lecture week 1 - outweigh the cost of shopping...

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