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What is the average earnings for someone with a Bachelor’s Degree?
What is the average earnings for someone with a Bachelor’s Degree?
Ph.D. holders have the highest average earnings listed.
Ph.D. holders have the highest average earnings listed.
True
What is the opportunity cost of attending university if the next best alternative job earns $30,000 per year?
What is the opportunity cost of attending university if the next best alternative job earns $30,000 per year?
$45,000
The marginal benefit must exceed the marginal _____ to undertake an activity.
The marginal benefit must exceed the marginal _____ to undertake an activity.
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Match the following levels of education with their average earnings:
Match the following levels of education with their average earnings:
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If no work is available, what is the total opportunity cost of attending university?
If no work is available, what is the total opportunity cost of attending university?
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What are sunk costs?
What are sunk costs?
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All students should attend university regardless of opportunity costs.
All students should attend university regardless of opportunity costs.
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What is the concept of opportunity cost?
What is the concept of opportunity cost?
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Marginal analysis compares total benefits with total costs.
Marginal analysis compares total benefits with total costs.
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What should you do if the benefits exceed the costs according to the behavioral rule?
What should you do if the benefits exceed the costs according to the behavioral rule?
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The study of how rational people make choices is called ______.
The study of how rational people make choices is called ______.
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Which of the following best describes scarcity?
Which of the following best describes scarcity?
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In the context of the hockey game scenario, what is the sunk cost?
In the context of the hockey game scenario, what is the sunk cost?
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Match the following terms with their correct definitions:
Match the following terms with their correct definitions:
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Limited _____ must be allocated to satisfy individual needs.
Limited _____ must be allocated to satisfy individual needs.
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What does opportunity cost represent?
What does opportunity cost represent?
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If the opportunity cost of taking an action is high, one is more likely to take the action.
If the opportunity cost of taking an action is high, one is more likely to take the action.
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What is marginal analysis?
What is marginal analysis?
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When a free concert ticket is given, the opportunity cost includes the price you could have sold the ticket for and __________.
When a free concert ticket is given, the opportunity cost includes the price you could have sold the ticket for and __________.
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Match each scenario with its corresponding economic concept:
Match each scenario with its corresponding economic concept:
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In the example of the movie, which of the following represents the opportunity cost?
In the example of the movie, which of the following represents the opportunity cost?
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Marginal benefit can sometimes be less than marginal cost, leading to a rational decision to not take an action.
Marginal benefit can sometimes be less than marginal cost, leading to a rational decision to not take an action.
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What defines non-recoverable costs?
What defines non-recoverable costs?
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Calculate the net benefit of purchasing one additional cookie if the marginal benefit is $5 and the marginal cost is $3.
Calculate the net benefit of purchasing one additional cookie if the marginal benefit is $5 and the marginal cost is $3.
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Marginal Benefit (MB) should always influence the decision to take an action.
Marginal Benefit (MB) should always influence the decision to take an action.
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What were the marginal costs (MC) for Francis when deciding to attend the concert?
What were the marginal costs (MC) for Francis when deciding to attend the concert?
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If Marginal Benefit (MB) is greater than Marginal Cost (MC), then the action should be __________.
If Marginal Benefit (MB) is greater than Marginal Cost (MC), then the action should be __________.
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Match the individuals with their decision regarding attending the concert:
Match the individuals with their decision regarding attending the concert:
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What was the total marginal cost for Megan to attend the concert?
What was the total marginal cost for Megan to attend the concert?
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What is the significance of sunk costs in decision making?
What is the significance of sunk costs in decision making?
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Megan can consider the price of the ticket a sunk cost since she planned to buy it.
Megan can consider the price of the ticket a sunk cost since she planned to buy it.
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What is one unintended consequence of strict firing policies in Italy and France?
What is one unintended consequence of strict firing policies in Italy and France?
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Mandatory seatbelt legislation will always lead to a decrease in the number of motor vehicle accidents.
Mandatory seatbelt legislation will always lead to a decrease in the number of motor vehicle accidents.
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Why does the marginal benefit of taking 'care' decline after mandatory seatbelt legislation?
Why does the marginal benefit of taking 'care' decline after mandatory seatbelt legislation?
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Microeconomics focuses on the decisions of __________, households, and firms.
Microeconomics focuses on the decisions of __________, households, and firms.
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Match the terms with their definitions:
Match the terms with their definitions:
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What is the opportunity cost of attending the concert if the ticket is free but you value the experience at $100?
What is the opportunity cost of attending the concert if the ticket is free but you value the experience at $100?
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What can be a reason for employers to hire temporary workers?
What can be a reason for employers to hire temporary workers?
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Economics is solely concerned with money-related decisions.
Economics is solely concerned with money-related decisions.
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The opportunity cost of an action only reflects the costs incurred, not the benefits derived from taking that action.
The opportunity cost of an action only reflects the costs incurred, not the benefits derived from taking that action.
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What must be identified to determine the opportunity cost of an action?
What must be identified to determine the opportunity cost of an action?
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What is the primary focus of macroeconomics?
What is the primary focus of macroeconomics?
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If you could sell a rare wine for $100 but choose to give it to a friend, the opportunity cost of keeping the wine is $______.
If you could sell a rare wine for $100 but choose to give it to a friend, the opportunity cost of keeping the wine is $______.
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If the opportunity cost of taking an action increases, how is that likely to affect the decision to take that action?
If the opportunity cost of taking an action increases, how is that likely to affect the decision to take that action?
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How did falling unemployment in 2014 affect university enrollment compared to the previous year?
How did falling unemployment in 2014 affect university enrollment compared to the previous year?
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What is the total combined value if you give the wine to a friend?
What is the total combined value if you give the wine to a friend?
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Match the action with its corresponding opportunity cost.
Match the action with its corresponding opportunity cost.
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Study Notes
Economic Principles
- Economics is the study of how rational individuals make choices (decisions) given scarce resources.
- The fundamental economic problem is scarcity; resources are limited.
- Decisions must be made about how to allocate these resources.
- Opportunity cost: The value of the best alternative forgone when making a choice.
Rational Decision-Making
- Opportunity Cost: The value of the next best alternative forfeited when choosing a particular option. Recognizing the value of alternative choices is essential for rational decision-making.
- Marginal Analysis: Evaluating the additional benefits and costs of an action. Decision-makers should consider actions where the marginal benefits exceed the marginal costs; this is a critical principle in economics.
- Ignore Sunk Costs: Past, irrecoverable costs should not influence current decisions. This is essential for effective decision-making. Only those costs that are avoided by not taking the action are relevant considerations.
Incentives
- Incentives alter marginal benefits or costs, impacting whether an action is taken.
- Changes in incentives can lead to unexpected and unintended consequences.
- Policies designed to address economic outcomes can alter incentives, creating unintended effects that are important to consider when designing and evaluating policies.
The Unintended Consequences of Public Policy
- Public policies can have unanticipated or undesirable effects on economic behavior.
- Recognizing this is essential for effective policy design.
- An example cited in the lecture is restricting employer ability to dismiss employees. This can lower the cost of job-related activities for the companies and/or the employer while potentially decreasing the amount of job opportunities, especially for young people.
- Another example discussed is mandatory seatbelt use raising the likelihood of traffic accidents.
Examples
- Example Scenarios: Several examples demonstrate economic decision-making principles using scenarios such as purchasing a discounted hockey ticket and subsequently losing it. Other scenarios involve calculating the opportunity cost of pursuing higher education, running a hot dog stand, and choosing to repair a damaged computer or not.
- Student Question: Examined the benefits of attending university. Data presented on average earnings and opportunity costs for various levels of education.
Macro & Microeconomics Differentiated
- Microeconomics: Focuses on individual decision-making by individuals, households, and firms within markets.
- Macroeconomics: Focuses on economy-wide phenomena, factors like inflation, unemployment, and economic growth.
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Description
Explore the fundamental principles of economics, focusing on scarcity, opportunity cost, and rational decision-making. This quiz will help you understand how to make choices when resources are limited and the significance of marginal analysis. Test your knowledge in economic theory and practical applications.
