economics

economics Define economics Explain how scarce resources influence choices Describe the influence of benefits and costs on deciding among alternatives Identify the decision rules individuals and firms use to make choices Explain why decisions are made “at the margin” Assess the general conditions that generate maximum utility or profits Economics is r - Opportunity cost Macroeconomics - Ceteris paribus Microeconomics V - Marginal cost Basic economic resources - Marginal benefit Scarcity - Law of diminishing marginal benefits Cost is - Law of increasing marginal costs Benefit - Net benefit Utility - Marginal decision rule Profit - Sunk cost 1. Suppose you are a fly-fishing guide. Your bookings of late great quantity of other goods may frequently be had have been low, and you are thinking of lowering the in exchange for it.”4 This is situation is known as the price of your guide service. If you lower your price, you’d diamond-water paradox. How does thinking at the expect more clients, ceteris paribus. But if other events margin help to explain the paradox? eccnr at ine same iirne as Yen decrease Yeiir Prices» rne 5. It is common for people trying to lose weight to notice expecied increase in ciienrs rnignr ner naPPen- Discuss that the first 10 pounds are much easier to lose than Pessibie enrcenies in rne renewing siniaiiensi the last 10 pounds. Use the concept of increasing mar- a. You lower your price, and at the same time, many gina1COStof explain Why this is the Case. of the local rivers are closed to fishing due to a 7. Suppose that you have 6 hours per day to devote to cirengni er reresi nres- studying economics and accounting. You estimate ii- Yen ieWer Yeiir Price» and at rne seine iirnea 3 neW your benefits of studying for each subject as follows: movie about fly-fishing is released and draws record attendance at the theaters. Marginal Marginal B H f B ft f 2. Discuss the costs and benefits of each of the following Siflfwiinié simyiinig activities; include at least one nonmonetary cost and “cm Exccctcc Eccccmicc “curs Exccctcc Accounting benefit in your discussion of each: Studying Score on (increase in Studying Score on (increase in 3 Stud mg for ari exam Econom- Econom- economics Account- Account- accounting c _ Y ,_ 5 '~ - 0 ics Per Day ics Exam score) ing Per Day ing Exam score) b. Going skiing on a class day n 44 0 - -7?-~ c. Taking a job. . _. ' ~__m_.. d. Watching television 1 52 18 1 10 3. Suppose that a friend of yours recently opened her 2 76 2 88 E own business. She is happy because it generated 3 85 10 __3_ 94 _ 5 $25,000 in earnings last year. How can you tell whether 4 94 8 4 96 2 this wasia good investment? ' 5 100 6 96 0 4. Economists are fond of saying that “there is no such 6 100 0 6 96 0 thing as a free lunch.” Use opportunity cost to explain the meaning of this Saying What IS the best way for you to divide up your study 5. In his book The Wealth of Nations, Adam Smith noted tmie In Order to maximize Your grades m_bOth Classes‘ (Hint: What is the marginal cost of studying econom- the contradiction that, Nothing 1S more useful than , ? Wh t , th , 1 t f t d , t_ water: but it will purchase scarce anything; scarce ics’ a IS 6 margma Co8 O S u ymg accoun mg‘) anything can be had in exchange for A diamond’ 4 Smith, Adam. The Wealth of Nations. Bantam Classic Edition, March 2003, New on the contrary, has scarce any value in use; but a very York: Bantam Dell (p. 41). answer those questions and I will upload the instructions for you. Those are the questions need to answers. Text book assignment is on Page 15. Do questions 1, 2, 4, and 7. Feel free to ask any questions about the assignment. This the name of the book:: Introduction to ECONOMICS social Issues and economic Thinking by WENDY A. STOCK.